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World Scientific

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Published by
World Scientific Publishing Co. Pte. Ltd.
5 Toh Tuck Link, Singapore 596224
USA office: 27 Warren Street, Suite 401-402, Hackensack, NJ 07601
UK office: 57 Shelton Street, Covent Garden, London WC2H 9HE

British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library.

THE BUSINESS OF PLASTIC SURGERY
Navigating a Successful Career
Copyright © 2010 by World Scientific Publishing Co. Pte. Ltd.
All rights reserved. This book, or parts thereof, may not be reproduced in any form or by any means,
electronic or mechanical, including photocopying, recording or any information storage and retrieval
system now known or to be invented, without written permission from the Publisher.

For photocopying of material in this volume, please pay a copying fee through the Copyright
Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA. In this case permission to
photocopy is not required from the publisher.

ISBN-13 978-981-4277-29-7
ISBN-10 981-4277-29-0

Illustrations by Heather Furnas
Cover design by Max Jaime Korman and Jimmy Low
Typeset by Stallion Press
Email: [email protected]

Printed in Singapore.

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We dedicate this book to all plastic surgeons who are committed to doing the
very best for their patients. In today’s world, success is often determined by
more than skill and hard work. We hope these chapters will help the accomplished surgeon develop the necessary business acumen to ensure a happy and
healthy career.

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Preface

The idea for this book came from a general feeling that we did not learn
anything about the business side of plastic surgery while we were in training.
In fact, after almost 20 years in practice, the information in this volume is what
we would have liked to have known when we first started our professional
careers, as well as through the years of practice. Plastic surgeons are as diverse
as the procedures we perform, but most of us have two things in common: an
MD degree and effectively a “Bad in Business” degree. Long gone are the days
of the good insurance reimbursements and increasing your practice volume
based on your fine reputation. Health maintenance organizations (HMOs)
and provider panels did away with both. With the commoditization of the
specialty, many patients are happy to settle for the cheapest price in town.
Times have changed, and we have to change with them. There are many
aspects of running a practice that were not even on the radar screen 10 or 20
years ago. This book collects the expertise of disparate professionals to help
you practice smarter.
We have divided the book into five parts. The first, Career Directions, is
intended for both residents in training as well as plastic surgeons who are
considering a change in their practice venue. It pays to choose your mode of
practice with eyes wide open. It can be time-consuming, costly, and stressful
to choose the wrong venue or to make a major change mid-career.
The second part, Marketing and Monitoring, will be most useful for the
private practitioner, either in solo or group practice, and the information presented here can be utilized more broadly for other practice venues. Web-based
and more traditional marketing can drive the patients in the door, but is your
practice retaining them? Tracking those numbers is what monitoring is all
about. Of course, you will never reach the numbers you would like without

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a well-managed practice. Practice management is generally undervalued and
underappreciated by physicians, and that is to our detriment.
The third part, Enhancing Both Practice and Career, reaches beyond a
basic practice to explore building an outpatient surgical suite, publishing,
investing in ever-expanding technological toys, building a medical spa, or
launching an invention. Many plastic surgeons are talented, creative people
who can grow beyond being clinicians alone. Often adding these facets to
one’s practice can be for fun, but they can be profitable if done well.
The fourth part, Watching Your Back, is devoted to peace of mind.
Physicians in general, and plastic surgeons in particular, lead stressful lives.
We can be doctors with unhappy patients and partners with souring partnerships. We may be indebted from education and business loans, and suffer
difficult relationships with parents, spouses, and children. Bad contracts, malpractice, and mental stress can take their toll if you take the wrong approach.
These chapters aim at both prevention of problems as well as how to deal with
them.
The final section, Retirement and Protecting Your Assets, lays out what
we all should know during our working years so that we are not painfully
surprised when we retire. We should all know how to protect our hard-earned
money, how our assets are vulnerable, and how we can save for the future.
We owe immense thanks to our contributors. There are things we know,
things we do not know, and most painfully, the things we do not even know
that we don’t know. Our contributors have worked extremely hard to minimize our ignorance. We hope this book will serve as a compass to help you
steer through the sometimes stormy waters encountered in the practice of
plastic surgery.
Josh Korman
Heather Furnas

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Contents

Preface

vii

List of Contributors

xiii

Part I: Career Directions

1

1.

The Job Search
Steven P. Davison and Mark W. Clemens

3

2.

Choosing an Academic Career in Plastic Surgery
Geoffrey C. Gurtner and Michael T. Longaker

29

3.

Solo Practice
Joshua M. Korman and Heather J. Furnas

39

4.

The Combined Reconstructive and Cosmetic Surgery Practice
Joseph M. Mlakar

51

5.

Making a Living in Reconstructive Surgery
Steven P. Davison and Mark W. Clemens

71

6.

Pursuing a Career at Kaiser Permanente
Robert Pearl

89

7.

Group Practice in Plastic Surgery
Debra J. Johnson

97

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Part II: Marketing and Monitoring

109

8.

Internal and External Marketing and Public Relations
Anne Cohen

111

9.

Online Marketing
Ryan Miller

149

10.

Optimizing Your Practice
Marie B. V. Olesen

169

11.

Preventative Maintenance of Your Practice
G. Marshall Franklin

199

Part III: Enhancing Both Practice and Career
12.

Developing, Establishing, and Operating Your Own
Surgical Suite
Gordon Merrick

227
229

13.

Publishing in Plastic Surgery
Deepak M. Gupta, Nicholas J. Panetta, Geoffrey C. Gurtner
and Michael T. Longaker

259

14.

Technology, Toys, and Traps
Francisco Canales

277

15.

A Medspa: To Have or Not to Have
M. Dean Vistnes and Lynn Heublein

289

16.

Medical Inventions: From Idea to Funding
Joshua M. Korman

303

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Contents

Part IV: Watching Your Back

xi

321

17.

Contracts
Carol K. Lucas, Esq.

18.

The Wheel of Misfortune: Avoiding Medical Liability
in Elective Surgery
Mark Gorney

345

Use of the Internet by Patients: How It Affects Your
Practice and What to Do About It
Ronald P. Gruber

363

Recognizing and Dealing with Stress: A New Model
of Resilience
Stephen Sideroff

377

19.

20.

21.

The Challenges for Women in Plastic Surgery
Debra J. Johnson, Cissy Tan, Cristina F. Keusch,
Sarah Troxel and Heather J. Furnas

Part V: Retirement and Protecting Your Assets

323

399

415

22.

Physician Asset Protection
Jay Adkisson

417

23.

Personal Financial Planning for Plastic Surgeons
Lawrence B. Keller

435

24.

Qualified Retirement Plans
Richard A. Pope

473

Index

503

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List of Contributors

Jay Adkisson, JD
Riser Adkisson LLP
Newport Beach, California
USA
[email protected]
www.risad.com
Francisco Canales, MD
Plastic Surgery Associates of Santa Rosa
Allegro MedSpa
Santa Rosa, California
USA
[email protected]
Mark W. Clemens, MD
Department of Plastic Surgery
Georgetown University Hospital
Washington, D.C.
USA
Anne Cohen, MBA
Principal, A. Cohen Marketing & PR, LLC
Kingston, New York
USA
[email protected]
www.acohenpr.com

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Steven P. Davison, DDS, MD, FACS
DA Vinci Plastic Surgery
Washington, D.C.
USA
[email protected]
G. Marshall Franklin, Jr., MBA, MHA
Executive Consultant, Mentor Solutions
Atlanta, Georgia
USA
[email protected]
www.mentorsolutions.com
Heather J. Furnas, MD
Plastic Surgery Associates of Santa Rosa
Allegro MedSpa
Santa Rosa, California
USA
[email protected]
Mark Gorney, MD, FACS
Clinical Professor Emeritus, Stanford University
Founding Member, The Doctors Company
Napa, California
USA
[email protected]
Ronald P. Gruber, MD
Clinical Assistant Professor
Division of Plastic and Reconstructive Surgery
University of California, San Francisco
Adjunct Clinical Faculty
Division of Plastic and Reconstructive Surgery
Stanford University
East Bay Aesthetic Plastic Surgery Center
Oakland, California
USA

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List of Contributors

Deepak M. Gupta, MD
Division of Plastic and Reconstructive Surgery
Department of Surgery
Stanford University School of Medicine
Stanford, California
USA
Geoffrey C. Gurtner, MD, FACS
Professor of Surgery
Division of Plastic and Reconstructive Surgery
Department of Surgery
Stanford University School of Medicine
Stanford, California
USA
[email protected]
Lynn Heublein, MBA
Co-Founder, SkinSpirit Skincare Clinic and Spa
Palo Alto, California
USA
[email protected]
Debra J. Johnson, MD, FACS
The Plastic Surgery Center
Sacramento, California
USA
[email protected]
Lawrence B. Keller, CLU, ChFC, CFP®
Founder, Physician Financial Services
Woodbury, New York
USA
[email protected]
Cristina F. Keusch, MD
Boca Raton Plastic Surgery Center
Boca Raton, Florida
USA

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Joshua M. Korman, MD, FACS
Adjunct Clinical Assistant Professor of Plastic Surgery
Stanford University School of Medicine
Plastic Surgeon, The Korman Group
Mountain View and Monterey, California
USA
[email protected]
Michael T. Longaker, MD, MBA, FACS
Deane P. and Louise Mitchell Professor of Surgery
Division of Plastic and Reconstructive Surgery
Department of Surgery
Stanford University School of Medicine
Stanford, California
USA
[email protected]
Carol K. Lucas, Esq.
Co-Chair, Business Practice Group
Head, Health Law Practice
Buchalter Nemer
Los Angeles, California
USA
[email protected]
Gordon Merrick
Director of Business Development
Advantage Healthcare Systems
Santa Monica, California
USA
[email protected]
Ryan Miller
Founder and President, Etna Interactive
San Luis Obispo, California
USA
www.etnainteractive.com

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List of Contributors

Joseph M. Mlakar, MD, FACS
Plastic Surgery Innovations
Fort Wayne, Indiana
USA
Marie B. V. Olesen
CEO, La Jolla Cosmetic Surgery Centre
Founder, Inform Solutions
Executive Consultant, Mentor Solutions, Mentor Corporation
La Jolla, California
USA
www.mentorsolutions.com
Nicholas J. Panetta, MD
Division of Plastic and Reconstructive Surgery
Department of Surgery
Stanford University School of Medicine
Stanford, California
USA
Robert Pearl, MD
Executive Director, The Permanente Medical Group
Oakland, California
Clinical Professor of Plastic Surgery
Stanford University School of Medicine
USA
[email protected]
Richard A. Pope, CAP, RFC
President and CEO, Applied Financial Group
Woodbury, New York
USA
[email protected]
www.appliedfinancialgroup.net

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Stephen Sideroff, PhD
Assistant Professor
Department of Psychiatry and Biobehavioral Sciences
David Geffen School of Medicine, UCLA
Clinical Director, Moonview Santuary
Santa Monica, California
USA
[email protected]
www.thirdwind.org
www.moonviewsanctuary.com
Cissy Tan, MD
Kaiser Permanente Plastic Surgery
San Diego, California
USA
[email protected]
Sarah Troxel, MD
Alaska Plastic Surgery
Anchorage, Alaska
USA
M. Dean Vistnes, MD, FACS
Co-Founder, SkinSpirit Skincare Clinic and Spa
Palo Alto, California
USA
[email protected]

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Part I
Career Directions

1

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1

The Job Search

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Steven P. Davison∗ , DDS, MD, FACS
and Mark W. Clemens, MD

Introduction

W

hy a chapter on the job search? The simple answer is that physicians
make mistakes. National experience suggests that 50 percent of physicians change jobs within the first two years.1 This number is significant and
disturbing.
Question: What gives us the authority to write on this subject? Answer:
Interest and experience. We have worked in venues that cross a multitude of
work cultures.
Prior to medical school, I was an associate in a private dental practice. I
have completed two residencies at traditional universities — one state and one
private. I have completed a residency and a fellowship at the Mayo Clinic and
the M. D. Anderson Cancer Center, respectively, both of which represent the
ultimate in multi-group practices. I have been employed by the governmentfunded U.S. Department of Veterans Affairs (VA) as chief of plastic surgery,
and in academic practice at a university hospital with a private multi-group
specialty practice. I am now a solo private practitioner. The only stint I need
to punch my ticket is the military, although as a closed system the VA is similar.
This laundry list illustrates the scope of my personal insight on the job search.
A mismatch in expectation and practice culture is a major contributor
to physician turnover. The three top reasons for leaving a practice are (1)
poor cultural fit with the practice (51 percent), (2) relocating closer to family
(42 percent), and (3) compensation (32 percent).2 Low compensation correlates with dissatisfaction, whereas high compensation does not as clearly match
satisfaction.3
Not only does the need to find a new job emotionally and financially impact
on the surgeon, it also impacts the employer. A primary care practice will spend
US$235,000 to add a physician.2 It is quite understandable that the cost to
∗ Steven P. Davison is the primary author of this chapter, so any references made in the first person

(e.g., “I”, “my”) refer to him.

3

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add a surgeon is even higher. We believe that the two reasons the physician
turnover number is so high are (1) inadequate prioritizations of the physician’s
values and (2) a failure of cultural fit. The two are intimately intertwined: the
first is ineffectively analyzing yourself, and the second is ineffectively analyzing
your potential employer.

Priorities
The first step in the job search is to inventory what is important to you and
to your family. What are your priorities? Consider your goals and things of
importance, not the priorities of your attending role models. If family time is
a top priority, then becoming an internationally known chairman of a program
may not fit.
This personal inventory should include spouse/partner input. Sit with
them and have a long talk. Set long-term five- and ten-year goals, and differentiate needs versus wants. What will be your commitment to medicine, and
what will be your commitment to yourself and your family?4 What are their
needs? The following topics might be included on a priority list:
Family
Income
Autonomy
Security
Location
Power
Diversity
Excitement

Predictability
Proximity to Family
Vacation
Call
Weather
Sports
Work Type
Recognition

Sometimes these priorities or expectations for a job are conflicting:
Expectations
Income
Industry
Environment
Location
Benefits
Security

vs.
vs.
vs.
vs.
vs.
vs.

Lifestyle
Family
Opportunity
Patient Pool
Retirement
Reimbursement

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5

When preparing your priority list, realize that money and success equal
money and success. Your priorities do not necessitate doing the same job,
cases, or position as your current attending or mentors.
When prioritizing, two big decisions are often opposing: (1) location vs.
job and (2) opportunity vs. job. The first tradeoff is that you can settle on a
location based on desire, family, or lifestyle, but compromise on your choice
of position. Perhaps the ideal job may not be in the ideal location. Consider
if an urban/suburban or rural location is a good start for you, then weigh
criteria such as family, leisure opportunities, or access to sporting events.
The second tradeoff is accepting a job offer rather than embracing an
opportunity. A job opening is often available because it has been vacated by
someone else. Why? Chaos provides opportunity; thus, a hospital or department in transition may provide that opportunity to you. So, do not eliminate
an opportunity just because the environment seems to be in flux. The Chinese
symbol for change is composed of two characters, one representing threat and
the other representing opportunity (Fig. 1).
When considering the job search, never underestimate an edge, and use it
whenever possible. Joining your father’s practice will shave ten years from your
developmental process. Do you have special contacts? Do you speak a selective
language? Can you make an offer to an ethnic group that seeks a customized
service such as Asian eyelids? When I was a resident, a plastics fellow with
a last name of one of the signature eponymous operations in plastic surgery
graduated one year after his father electively retired. To not take advantage of
“passing the baton” seemed strange.
You must analyze your own skill sets. Are you entrepreneurial or do you
have no such inclination? Was your lemonade stand the best in the neighborhood? How are your leadership skills? Do you enjoy negotiations? If you do
not, then you need to seriously consider being in a position where someone

Fig. 1. The Chinese symbol for “change” is composed of two characters, one representing threat
and the other representing opportunity.

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else does that for you, i.e., a group practice. In solo practice, the need for
negotiation cannot be overstressed.

Dos and Don’ts for Planning a Job Search5
Do think about your work style, ideal work environment, and personal
needs before you launch a job search.
Do take your significant other’s needs into consideration.
Do learn something about an area — including the housing, economy,
amenities, and malpractice climate — before assessing job opportunities
there.
Do research various practice types, and decide which is more likely to mesh
with your personality and career goals.
Do talk to mentors, medical school faculty, residency program alumni,
colleagues, and others to gather information and help clarify your goals.
Do think about getting additional training if you are unhappy in your
current job situation.
Don’t limit yourself to one type of practice. As a physician, you have many
options to choose from.
Don’t move anywhere just for a job.
Don’t rush your job search. Give yourself time to develop and implement
a strategy.

The Search
Often the best positions, opportunities, or practices are in the hidden job market. These positions are not advertised, but can be found through networks
or resources such as alumni groups. Three-fourths of jobs are not advertised.5
You therefore need to network beyond your inner circle, i.e., healthcare consultants, representatives, attorneys, or accountants. Networking means tapping into the collective experience at your disposal. A non-threatening
way to begin is to solicit an attending from your program to introduce you
to several people at a meeting. At each interaction, appeal to the ego by first
asking for advice, not a job (Fig. 2).

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Fig. 2.

7

Networking dos and don’ts.

Recruitment Firms
Search or recruitment firms function either as your agent or as your practice’s
agent. If the firm represents the practice, ask yourself why this job needs a
recruitment firm. In our experience, it is usually location or high turnover in
staff. The sales literature all reads the same: “Unique opportunity in a growth
practice; four-season environment with excellent recreation, living, and cultural opportunities,” etc. However, the information is nearly always lacking.
Most agencies work for contingency fees under which the practice pays the
recruitment agency, for example, one-third of your first year’s salary. The
price of their networking for you is that their commission erodes your upfront

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bargaining power. Plastic surgery is not such an invaluable commodity that
price is not an option. An agent’s cut comes from your end in the form of
bonuses, moving expenses, or commissions. The only example whereby we
can envision a recruiter working for you is if you have such a marketable skill
that all power is yours, such as trauma neurosurgeons or interventional radiologists that are needed to fulfill Emergency Medical Treatment and Active
Labor Act (EMTALA) functions at hospitals. If you are set on a certain
area, write a cover letter to all of the practices in the area to inquire about
opportunities.
The “sister” to the recruiter is the career counselor. Career counselors
are paid for by you and, as such, you utilize them as a career coach. Their
motivation is directed toward your interests. I have found my attorney to be
an excellent coach.6 The only problem is that I have to talk quickly because
he charges US$500 per hour!

Types of Positions
Historically, the majority of plastic surgeons were solo practitioners; however,
times have changed. In 1997, 75 percent of surgical specialists were independent. In 2005, that number dropped to 68.4 percent, a 20-percent change
in numbers per year. Specifically, in the case of American Society of Plastic
Surgeons (ASPS) plastic surgeons surveyed in 2008, 67 percent were in solo
practice, but by March 2009 that number decreased to 58 percent — still
a majority, but a lean one. The reasons cited for leaving solo practice were
(1) safety in numbers, (2) it allows quicker footing, (3) economies of scale,
(4) security, and (5) the benefit of data collection and negotiation. Keys to
success included well thought-out governance and a shared central vision.
Problems being in a group included division of staff time and jealousy over
use of resources.6
Finding satisfaction data for plastic surgeons is nearly impossible. However,
one recent paper by Rohrich et al. sheds insight.7 Plastic surgeons over 50 years
of age (56 percent of plastic surgeons) are more likely to be solo (65 percent)
than general physicians (26.7 percent). The majority of plastic surgeons are satisfied (95 percent) compared to all doctors (84 percent). Plastic surgeons work
fewer hours per week (52.2 hours) than the average doctor (53.7 hours), with
the majority of that time spent engaged in patient care (88.4 percent). Not
surprisingly, reconstructive surgeons work a longer average week (56.5 hours)
than cosmetic surgeons (49.7 hours) and are more likely to be in academics
than in single-specialty practice.

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Fig. 3.

9

Principal setting of all specialties (blue) and plastic surgery (red) as of 2006.

An ASPS 2006 survey found 56 percent of ASPS members in solo practice,
15 percent sharing facilities or small groups, and 10 percent in academics
(Fig. 3).8

Choosing a Practice
What choices are there in deciding on a type of practice? The choice is really
not of practice type, but rather of risk tolerance (Fig. 4).

Government
A government position can come in many forms or with multiple agencies.
Examples include the Indian Health Service, the VA, the U.S. Department

Government

Academics

Multi-Specialty
Group

Single-Specialty
Group

Solo Practice

Fig. 4. Types of practice, arranged along a continuum of increasing security (left) vs. increasing
autonomy (right).

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The Business of Plastic Surgery

of State, the National Institutes of Health, and the U.S. Food and Drug
Administration. Government agencies can be the gold standard of care (or
not). The VA, once criticized by some, now sets the standard in medical
outcomes and disease process management. What defines government work
is that it is relatively free of insurance hassles, yet is heavy in administrative
hassles. It is total security versus no autonomy. The lifestyle, including calls
and hours, is often mandated, but may be the most manageable.

Academics
Academics predominantly offers intellectual stimulation and a protected environment. The demands of the inquiring residents’ minds require surgeons in
academics to keep abreast of and teach the latest techniques. There is considerable security in a built-in referral base of patients, physicians, and emergency
rooms. Interestingly, plastic surgery is a specialty in which some of the greatest thinkers are not in academics per se, but are academicians in the truest
sense of answering questions. But the cost is a loss of autonomy: “If you are
a control freak, and a lot of doctors are, take that into account because, as an
academic physician, you aren’t going to be in control.”8 Although a chairman
may appear to wield a great deal of power, it is the president of the university
(over the dean) who makes final decisions.
Two things have changed academic practice: (1) clinical income and (2)
duty hours. The classical model of academic medicine, where you started at
one rank and were paid according to promotions that were tied to publications, is changing. That model included protected research time and subsidized teaching responsibilities. Within the new academic model, income
is generated from clinical practice, similar to a multi-group practice, and is
frequently called a faculty-practice plan. The income is also supported by
research, administrative, or endowment funds, but less so than in the past.
Now, in much of academic practice doctors have to generate their own salaries,
whether through teaching, research, or seeing patients. This changes the academic career paradigm — the idea of moving among institutions to be promoted from associate professor to professor — which may not be feasible in the
future. You may relocate, but you cannot relocate your patient base and, consequently, your income. The field of academics has fundamentally changed;
unless you have such specifically sought-after skills or research experience, you
are more likely to advance by remaining at the same institution or by moving
no farther than to another institution in the same city. Be wary of signing a
non-compete agreement. In Washington, D.C., some of the most successful

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11

career academics have bounced between the various universities. Moreover, it
makes for a smoother transition to move from the university community into
the local community, where you still have your patient base, as I have after ten
years in practice.
In terms of duty hours, two core changes in the academic field are the
80-hour resident work week and the need for increased resident supervision.
These rules require more hands-on time to do the cases, so academic practice
increasingly resembles a multi-group specialty practice. The days when residents operated unsupervised on clinic patients, for maximum resident benefit,
are long gone.
The following grouping outlines some of the disparities in academics.
Advantages
Release from business
Intellectual freedom
Stimulation
Research
Skill enhancement
Challenging cases
Personal interactions
Positive reinforcement from teaching
Security

Disadvantages
Less control
Limited input
Inertia of change
Income
No equity
Time-consuming, non-incomegenerating meetings and
committees

Some of the positives and negatives constitute two faces of the same coin.
There are great opportunities for personal interactions, but then a political war may ensue. “Do you play well in the sand box? How big a sand
box do you want to play in?”9 The following is a list of tradeoffs compiled by the chairman of our institution (Georgetown University Hospital)
in 2005:
• Pluses:








Resident support
Convenience
Brand name
Malpractice insurance rate
Administrative infrastructure
Human resources
Favorable managed care contracts

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• Minuses:

• Joint Commission on Accreditation of Healthcare Organizations
(JCAHO) — rules, roadblocks, paperwork
• Cost of PUBS, particularly for self-pay patients
• No help from managed care offices, such as “carving out” or “opting
out”
• Lack of space and slow response time to needs
• Neglect of physical space and patient care areas
• Insensitivity to marketing
• Difficulty in adopting new technology
• Antiquated technology systems
• Ineffective human resources (difficulty dismissing support staff)
• Security issues
• Fringe plans including disability, health, and retirement

In sum, it is possible to maintain academic affiliations even if you are in the
community; however, it requires energy, and it must be a priority over purely
income-generating activities.

Multi-specialty group
This group, with a mix of primary care and specialties (ideally a 50:50 ratio),
is in the center of the “security vs. autonomy” spectrum. It sacrifices decisionmaking capabilities for the benefit of a captive referral base. One of the crucial
components is physician ownership. Group sizes vary from ten physicians to
the enormity of the Mayo Clinic. As size increases, governance and autonomy become more remote; however, economy of volume increases. Generally,
income is favorable for plastic surgeons in a multi-specialty group, although
not as generous as that earned in single-specialty groups. To be pro-physician,
a multi-specialty group must operate independently of the hospital as priorities differ. The hospital’s goal is to improve its bottom line, not enhance
physician income. Practice building is substantially easier for the plastic surgeon whose high-income-generating potential can yield effective bargaining
power. Although a multi-specialty group offers a potentially good lifestyle with
built-in call coverage, the culture of the group must be right. Is the practice
focused on balance or on productivity? What is the group’s reputation? Finally,
what is the eventual buy-in cost, i.e., is there an equity stake? Groups with
a substantial percentage of capitated patients will not favor surgical services,
especially those performed by plastic surgeons.

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Single-specialty group
This model has many advantages and is common in plastic surgery. Group sizes
vary from 2 to 11 people.7 Normally, this model works better if a spectrum of
partners exists to provide different skill sets and types of services. The singlespecialty group offers, in all probability, the peak of potential income because
economies of scale facilitate minimizing the overhead. Although the singlespecialty model offers interest, stimulation, and companionship, the potential
for fracture exists. A built-in system for call and schedule coverage exists.
Single-specialty groups are often busy, yet there is less independence than in
solo practice.
Benefits and Drawbacks of Group Practice7
Benefits
• Greater negotiating power with
vendors, hospitals, and payers
• Access to more capital for
purchases/investment
• Economies of scale that provide
greater access to recruiting and
retaining exceptional personnel
• Ability to cite rigorous
outcomes-based data due to the
large patient base and share
information on a day-to-day
basis
• The likelihood that advanced
electronic medical records
(EMRs) will be used in the
practice, eliminating or reducing
paper records and allowing
information to flow off-site
• Development of a stronger brand
for the practice
• Greater quality assurance
• Lifestyle improvement through
partners who share coverage of
the practice

Drawbacks
• Slowness in making decisions/
implementing change
• Difficulty in balancing personal
goals with what is best for the
group
• Discrepancies in access to
personnel or other resources
• Potential for interpersonal
conflict

• Interdependence on peers

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The potential for ownership and equity exists, but the details must be
spelled out to assure a balance of power between junior and senior partners.
The success of the group depends on the philosophy of the founding senior
partner. If he or she places the group’s benefit before his or her own, this is
an ideal situation.

Solo practice
It is obvious that solo practice provides the most autonomy and carries the
biggest risk. It does allow easy decision-making, and the implication of those
decisions is only as good as the surgeon who follows through. It allows
flexibility and, potentially, high income; however, the risk of isolation and
stagnation requires greater need for interaction outside of the practice. A genuine problem with solo practice is coverage of call when the surgeon is away.
Finding adequate coverage requires thought; otherwise, it becomes draining.
It is important not to rush to financial overextension when starting a solo
practice because no economy of scale exists; you cover the entire “nut.”
If you are considering solo practice, you need the following: (1) desire for
independence; (2) market research on location and patient access; (3) careful
financial planning (you may need enough money in case you do not draw a
salary for one year); and (4) versatility.
Because this model is a balance of risk vs. investment vs. autonomy, you
must address the two biggest issues — patients and money. This requires a
business plan. A start-up expense of US$500,000 is not unreasonable. An
upmarket space with an operating room facility and spa services will require
closer to 1 million dollars. This amount must cover start-up, insurance, and
working capital to stay in business. Options for financing a solo practice include
(1) a term loan, which you repay over a certain period, but for which you may
need a personal guarantee; (2) a line of credit, which you use or repay and use
again; or (3) lease financing for equipment, which is similar to a car lease.









A Good Business Plan …9
clearly expresses your concept, how it fits into a continuum of care, and
what problem or need it addresses
outlines risks and contingent plans
documents market demographics and need
differentiates you from the competition
outlines the proposed organization structure
makes realistic financial projections
tells investors what they can expect to gain for their risks.

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Job Expectations
It has been said that an expectation is a resentment waiting to happen. To
avoid unrealistic expectations, information is crucial to create a correct mental
setting. You must possess a realistic sense of income and patient needs, which
translates into practice success. These data are available and considerably more
reliable than hearsay or lore.

Need
Learn the ratio of plastic surgeons to population in the location(s) you are
considering. The density of plastic surgeons is readily available from the
ASPS Practice Management Resource Center (www.plasticsurgery.org). What
it reveals is not what you may think. Los Angeles, California, does not contain
the highest density of plastic surgeons. In fact, conservative Washington, D.C.,
has the highest density per “state” at 1:26,000. By contrast, San Francisco,
California, Rochester, Minnesota (Mayo Clinic), and Naples, Florida, are in a
select group of cities with a ratio of 1:15,000 or less.
What is the optimal physician-to-patient ratio to start a viable practice? This
is clearly cultural- and case-sensitive. However, the 1:100,000 ratio has been
thrown out as an ideal; 1:70,000 as solid; and 1:40,000 as a minimum. Thus,
Brownsville, Texas (1:335,222), or Johnson City, Tennessee (1:480,000),
may represent a more favorable ratio. This clearly does not equate ratio with
demand, but it compares considerably better than in areas with population
densities exceeding 1 million: San Francisco, California (1:13,115); West Palm
Beach, Florida (1:22,100); Miami, Florida (1:30,045); and Orange County,
California (1:30,280). Although the people in these areas may want to support another plastic surgeon, they do not need one. Most residents practice
within 90 miles of their graduating program; thus, more saturation will exist
in areas of close proximity to a program.

Income
Income data are difficult to obtain to compare with other specialties or to
generate realistic expectations. Without such data, what constitutes fair market
value and worth are difficult abstracts.
Within the plastic surgery discipline, the first myth to dispel is the perceived imbalance between private and academic practice incomes. A number
of recent studies have shed light on this myth.10, 11 Physicians having the same
experience/age range earn nearly equivalent incomes; however, academic surgeons, by performing considerably more relative value units (RVUs) of work,

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Fig. 5.

Surgeons’ average taxable income.

perform 7,101 RVUs compared to 5,962 RVUs in private practice to generate
the same income. Surprisingly, the average annual salary for the plastic surgery
faculty is US$370,000.
The graph shown below (Fig. 5), from an ASPS lifestyle survey, shows
that most incomes range from US$299,000 to US$499,000.12 The financial superstars earning US$1 million or more comprise only seven percent of
our population. But, again, money is only one factor less important than culture. This I can attest to having taken an 80-percent pay cut to improve my
environment, and I have never been happier.

Taxable income
More accurate data are available for academic income. The Medical Group
Management Association (MGMA) reviewed 85 individual reports on academic surgeons who spent at least 65 percent of their time in clinical practice;
moreover, 16 percent of the time was spent teaching and 9 percent, researching. The median starting compensation was US$205,570. Taken as a whole,
the mean base salary was US$239,641 and the median total was US$310,000
(90th percentile: US$591,522). This, in turn, was compared to a similar group
of private practitioners (80 respondents from 37 practices) with a mean total
compensation of US$366,141 and a median total of US$324,837 (90th percentile: US$636,304).13
In conclusion, academic physicians make nearly as much, on average, as
their private practice counterparts. Further details are shown in Fig. 6.

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Fig. 6.

17

Academic versus non-academic incomes.

Of utmost importance to those seeking their first job as an instructor
or assistant professor is the starting salary. Below is the breakdown of those
incomes for the plastic surgery faculty.
Instructor
25th Percentile
Median
75th Percentile
Mean

US$79,000
US$148,000
US$302,000
US$183,800

Assistant Professor
25th Percentile
Median
75th Percentile
Mean

US$186,000
US$214,000
US$256,000
US$241,000

The good news is that if you stay the course and ascend to chief resident,
the mean income is US$436,800; even better, as chairman, the income is
US$799,000.5
As an indicator of clinical activity, two measurable parameters exist — collections and gross charges. In academic surgery, where surgeons’ productivity
is increased by resident work multipliers, residents can help you move bigger
cases and help look after sicker patients. The following are collection and
billing numbers for partial clinical, full clinical, and private practice surgeons.

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Collections
Academic — 67 percent clinical (42 individuals)
Mean: US$762,492
Median: US$578,875
Academic — 100 percent clinical (55 individuals)
Mean: US$979,159
Median: US$745,374
90th percentile: US$1,683,254
Private Practice (33 individuals)
Mean: US$784,819
Median: US$683,086
90th percentile: US$1,434,897
Gross Charges
Academic — 100 percent clinical (46 individuals)
Mean: US$2,014,320
Median: US$1,931,126
90th percentile: US$3,185,747
Private Practice (34 individuals)
Mean: US$1,240,339
Median: US$1,180,324
90th percentile: US$1,890,139
The difference in gross charges between academic and private practices,
as well as the relative closeness of collections, reflects the increased self-pay of
private practice and consequently less write-offs.14

Selling Yourself
Once you have confirmed a location and a practice type, you must now sell
yourself. Your correspondence should be of top quality. A focused cover letter
addresses the practice’s needs and changes the focus to them, while at the same
time touting your values, experience, and skills. Your curriculum vitae (CV)
should be up to date and easy to navigate. Prior to your interview, research the
practice. You have only one opportunity to create a positive first impression.
The first interview is about selling yourself. Rather than focusing on compensation and call, discuss governance and service. During the interview, do not

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tell the employer what you can do for them; rather, ask them what they need
from you. Then, be certain to emphasize how you can add to the practice.
Make a point to meet or to call everyone in the practice. Do a post-interview
debriefing, write down your comparisons, and make sure of a post-interview
call or letter thanking the practice for their time. Consider contacting the last
person who left the practice.
Information is power. You must be prepared for an interview, you must
know the practice group or institution, and you must know the surrounding
environment and the ratio of plastic surgeons to the community. All of this
information is readily available on the Internet.
Because evaluating different positions with limited time between interviews is difficult, make a comparison list. Note the following comparison from
my job search (Table 1).
You should be cognizant of the practice environment, patient mix, and
involved expenses. This list allows you to compare apples with oranges. It
can contrast clinical income, benefits, and location. It can be as broad or as
detailed as your personality dictates.

Table 1.

Academic job comparison.

University 1
Chairman

Hospital
System
Division
Demographic
Ratio per Capita
Income
Start
5 yrs
Payback
Case Mix
Referral
Risk
Reward

Indecisive, manipulative
(4/10)
Know personally
Lost money (2/10)

University 2
Controlling, egotistical (6/10)

World-renowned
Huge network
No respect
1/11 attending
1:66,000

International reputation
Generates lots of income
(9/10)
No reputation
Bankrupt
Major force
1/3
1:29,000

US$150,000
US$210,000
US$0
5/10
None
2/10
3/10

US$150,000
US$300,000
US$49,000
9/10
Wide open
7/10
7/10

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Next, put the list away for a week. If you return to it and emotionally
you do not like the findings, re-evaluate your priority list. When weighing
positions, think again about needs versus wants and compromise versus reality.
Discover peripheral information about the practice. You particularly need to
know upfront the pathway to partnership.

Red flags
• A wife as an office manager — There will always be preferential treatment.
• Retiring or slowing down senior partner — What is the plan for retirement
and the funding of that retirement?
• Practice name — Is it egocentric? There is a big difference between your
role at “Advanced Plastic Surgery” and “Minnie Mouse Esthetic Center.”
The first name has more potential, unless you are Mickey Mouse.
• High office overhead — Are you being recruited to cover costs? If so,
this is not a long-term feasible relationship; rather, it is a revolving-door
relationship.

Mama’s (or papa’s) list
“Because if momma isn’t happy, then no one’s happy.” When you are closing
in on a decision, revisit the needs of your spouse/partner. Their evaluation
list can add enormously to long-term success. Remember, 36 percent of individuals relocate based on a significant other’s needs. Table 2 is my significant
other’s list from 1999. We picked choice B, and now she never wants to leave.

Show me the money
When you are content with the position, the environment, and your cultural
fit, it is time to look at the books. You need as open a book as is feasible, and if
Table 2.

Spouse/partner life choices.
A

Cost of Living
House Choice
Friends
Family
Activities
Population
Visitor Destination

5/10 (moderate)
75 percent
1
0/10
3/10
Blue collar
2/10

B
8/10 (high)
100 percent
6
0/10
8/10
White collar
9/10

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the practice does not want to share it with you after you have made a few visits
to the practice, a problem exists. It is valuable to see numbers from the last
person with a similar position, including billings, receivables, and overhead
expenses.
When you discuss finances, avoid the money question: “How much will I
make?” Rather, concentrate on the real issues: (1) patient mix, (2) productivity
potential, (3) collection rates, and (4) controllable and fixed expenses.
Income is generally gross collection minus expenses. These expenses can be
substantial if they include infrastructure costs, surgical center costs, or heavy
overhead. A benchmark for very successful collections in plastic surgery as
gleaned from practice advertisements is US$1.2 million. This seems to be the
“magic number”. Most practices, academic or private, have profit and loss
statements. If possible, ask to see one for a comparable employee.
Remember that, unless you are in solo practice, you probably will have
much more control over production than you personally will have over
expenses. When joining a practice, find out about ownership, hard assets,
and financial risks and liabilities. What will be the buy-in cost, “blue sky”, or
retirement transition? “blue sky”, or the goodwill of the practice name, was a
more relevant concept prior to changes in managed care penetration. Unless
the practice is the only real show in town, “blue sky” may have little value.

Respect
Never accept a position with someone you do not respect or whom you consider undercompensated. You want to strive to be that person, and lack of
respect will lead to dissatisfaction. It is a rare situation where you will earn
more, or outshine, your employer. If you do, it will not be pretty.

Contracts
Prior to a contract, there is a letter of intent, which serves as a binding document while the contract is being written. A health care attorney should
review the contract. This is not a role for a friend of a friend or “Uncle
Johnny” because the long-term costs are too high. Rather, the reviewer
should be a seasoned professional who is familiar with the laws and practices of your proposed location. Get the details in writing and get the contract
reviewed.15
The contract is critically important if things do not happen as expected.
A contract is like a prenuptial agreement: you only need it in a divorce. The

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contract should include the following:
• Job Description — This includes what job you will be performing, on
whom, and for how many hours per week. On-call responsibilities are an
important point to be negotiated if this matters to you.
• Compensation — Low compensation correlates with dissatisfaction,
whereas high compensation does not correlate so clearly with satisfaction. A
fair compensation is essential. Individuals need to work for what they think
they are worth as long as that is not inflated. Salary needs to be defined,
as does the bonus structure. That is, upon what measure of productivity
will raises and bonuses be based? Acceptable measures are RVU, charges,
and collections. The RVU scale is the only measure of true work because
charges are dependent on what fee structure is utilized and collections are
dependent on the payer mix. Profitability, or residual money left after gross
income minus expenses, is a common model, but it does not favor physicians
because expenses are not a variable which they directly control.
• Benefits — Insurance, retirement, and personal development expenses
should be covered. Costs of attending meetings are real expenses for surgeons, as are multiple hospital dues and license fees. We suggest US$10,000
as a minimum need per year; for the long term, US$25,000 in development
expenses is more realistic to cover continuing medical education, recertification, travel, books, etc.
• Malpractice — What is important is not what the employer pays, it is
what is not covered. There are two types of malpractice insurance: (1)
occurrence-based, which covers you indefinitely for acts that occurred during coverage; and (2) claims made, which only covers for claims filed while
the policy is in effect. The latter is much cheaper, yet requires a tail policy to cover suits after you leave the practice. Who pays for this must be
defined.
• Termination Clauses — You need objective, rather than subjective, standards. There are two types of termination: (1) not for cause, which usually
provides a notice period of 3, 6, or 12 months. This clause works to the benefit of both parties. Six months is a good compromise for a surgeon; and (2)
for cause, which sets forth on what ground(s) you can be fired. Clear infractions, such as loss of license or felonies, are simple, but you must consider
lesser issues. What happens if one of the other partners simply does not
like you?
• Partnership and Governance — You need specific parameters to buy into
a partnership. What is the track, what is the time frame, and what is it

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tied to? Do not be too aggressive on this point as it is their assets at stake. I
witnessed one of our fellows lose a plum position by pushing this time frame.
Remember, it is their hard-earned practice at stake. More importantly, is it
spelled out?
• Loan Agreements — Sometimes, hospital loan agreements or salary support
is included. What are the repayment terms, what is forgiveness, and what
are the repercussions if you leave prematurely?
• Receivables — Who owns your uncollected money when you leave or retire?
This can realistically be US$400,000 or so. It changes the impetus of how
productive you will be in your last months.
• Restrictive Covenants — There are three components of a non-compete
agreement: (1) non-competition, which sets forth the area and period of
time in which you cannot practice close to your old job; (2) non-solicitation,
which sets forth rules about attracting patients to leave with you (this needs
to be balanced with patient care interests); and (3) non-employment, which
sets forth rules about poaching staff when you depart. Appreciate that these
restrictive covenants are written to protect the practice, not you or the
patients’ interests.
The most important covenant is the restrictive non-competition covenant.
It must be reasonable, perhaps one year. It should be a realistic radius
from the main office, rather than an overlapping radius from all satellite
offices and affiliated institutions. A recent graduate asked me to review a
contract, which was excellent except for the non-competition clause, which
included radii around all satellites, offices, and affected institutions that,
in sum, eliminated Manhattan and most of the remaining boroughs of
New York City. Do not sign such a contract unless you include a buy-out
clause.
Unfortunately, the larger the institution with which you are negotiating
and the lesser your name, the more the employer controls the hiring process.
If you are not comfortable negotiating, have your attorney do it. It is critical
to invest time and money in this aspect of the process, because invalidating a
contract costs a lot more of both.16

Getting Started
No matter which position you accept, getting started requires working back
from the longest deadline. In attractive states in which to practice, acquiring

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licenses can take up to nine months. No license means no provider number,
which can take six months. No provider number means no reimbursement.
It is important to settle in to fit with the culture. The primary reason that
physicians leave positions is lack of fit; thus, be careful. Sit back, absorb the
culture, and do not try to correct it early in your employment (Fig. 7). “As
a new associate, it’s up to you to adapt to practice culture, not the other way
around.”17
When developing your surgical practice, be careful not to overstep boundaries. How do you handle call duties, particularly when covering other surgeons’ patients? What happens if these patients subsequently want to come to
you? This has the potential to become very unpleasant. Consider mentorship

Fig. 7.

The dos and don’ts of beginning a new job.

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and ask for advice. Senior surgeons appreciate that and, face it, you do not
have all of the answers.

Returning to practice
Licensing and renewal of credentials can be a significant process. Maintenance
of both is easier than reinstatement. If you are walking away from a practice,
be certain to address tail insurance coverage.

Unrest
It is not uncommon for young surgeons, as their productivity increases, to
develop some unrest and financial dissatisfaction two or three years into practice. We define this as the two-year question: “I bring in amount A, yet I am
only getting paid amount B. Is this fair?” The problem is often a disconnect
between the amount of the practice investment and what the physician thinks
he or she is worth. Note the diagram in Fig. 8.
Observe the break-even point at which a new hire with a base salary generates income sufficient to exceed his or her expenses. This break-even point
is variable based on the environment, workload, and aggressiveness of the
young surgeon, and it often occurs around two years’ practice. The surgeon
might appreciate that the practice invested the amount below the break-even
line during the first two years. The practice needs to recap its investment
prior to discussing payment of salary or bonus based on the surplus after the

Fig. 8.

The two-year question.

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break-even. Both parties can appreciate what is involved, without emotional
distress, by reviewing it in this figure form. Although it does not mean that you
do not get a pay raise, some payment on investment is appropriate. At my last
position, you had to repay all of the start-up deficit from your bonus. This was
fair, upfront, and out-of-the-box thinking. Then, you received most of your
excess income in bonus after first reinvesting 10 percent in the department.
Keep in mind that during the emotional negotiation period, it is business,
not personal. Consider yourself a top candidate with unlimited potential, while
taking into account that the practice, university, or group has its investment
to protect. I recommended one of our best fellows to a practice in which a
friend was a partner. It would have been a great fit, but our former fellow’s
husband irritated the partners by pushing too far during negotiations. It is
essential to consider the analogy that, when emerging from residency, you are
like a horse in the Kentucky Derby. Your odds may be great, but from the
practice’s viewpoint you are just as likely to break a leg as you are to win.

Conclusions
1.
2.
3.
4.
5.
6.

Do a personal inventory. What are your needs versus your wants?
Consider location versus job, and job versus opportunity.
Practice types are a balance of security and autonomy.
Culture and fit are very important to success.
Information is power.
In negotiations, productivity formula, buy-in, and restrictive covenants
are crucial.

References
1. United States Department of Labor. Occupational Outlook Handbook, 2008–09
Edition. Available at www.bls.gov (accessed June 6, 2009).
2. Primary care. The Physician Recruiter 15(3): 2–4, 2007.
3. Larkin H. Good idea, bad location. American Medical News. July 31, 1995, p. 7.
4. Helmer L. Living a balanced life. Medical Economics. Nov 3, 2006, p. 18.
5. Weiss GG. Finding a job — step 2: start looking. Medical Economics. Nov 5, 2004,
p. 14.
6. American Society of Plastic Surgeons. Statistics 2008. Available at www.asps.com
(accessed June 1, 2009).
7. Rohrich RJ, McGrath MH, Lawrence TW et al. Plastic surgeons over 50: practice
patterns, satisfaction, and retirement plans. Plast Reconstr Surg 121(4): 1458,
2008.

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8. Guglielmo WJ. Private practice or academia? Medical Economics, June 15, 2007,
pp. 51–57.
9. Mills W. Integrative medicine clinic requires solid business plan [Integrative
Medicine]. Physician Executive, July 1, 2003.
10. Bussard DA. Private practice versus academia. J Oral Maxillofacial Surgery 61(7):
827–828, 2003.
11. Brown OW. Academic medicine or private practice: you can’t tell the players
without a scorecard. J Vascular Surgery 46(2): 387–390, 2007.
12. Everson J. ASPS lifestyle survey shows grass is not always greener. Plastic Surgery
News. April 2006, p. 27.
13. Baginski C. Tips for successful physician recruitment and retention. Available at
Medical Group Management Association Blog (blog.mgma.com/blog). July 9,
2009.
14. Stokes M. AACPS survey challenges salary perceptions, offers benchmarks for
institutional support. Plastic Surgery News. August 2008, p. 5.
15. Havighurst C. Health Care Choices. AEI Press, Washington, D.C., 1994.
16. Bernick DM. How to contract with an associate physician. Physician’s News Digest.
October 2008.
17. Weiss GG. Finding a job — step 5: settling in. Medical Economics. February 4,
2005.

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Choosing an Academic Career
in Plastic Surgery
Geoffrey C. Gurtner, MD, FACS
and Michael T. Longaker, MD, MBA, FACS

Introduction

W

hy would anyone choose an academic career in plastic surgery? Unlike
surgical specialties such as cardiac or transplant surgery that need intensive care units and specialized anesthesia, plastic surgeons are generally not
closely tied to the hospital. In most cases, plastic surgeons do not have complex requirements in performing surgery and taking care of patients, which
makes the expensive infrastructure of most modern hospitals redundant and
unnecessary. For this reason, along with practice preferences heavily weighted
towards outpatient surgery, most plastic surgeons spend nearly all of their time
in an office-based setting with their own operating suites and have little or no
contact with a hospital or academic medical center on a regular basis.
Moreover, the average plastic surgeon does not perform a single repetitive procedure such as hip replacement or cataract surgery that is predictable
as a diagnosis-related group (DRG)-based revenue generator in the eyes of
hospital administrators or CEOs. Plastic surgeons perform complex and varied procedures across many different cost bases within the academic medical
center. The result of this is that, unlike orthopedic surgeons or neurosurgeons, it is difficult for hospital administrators to place a financial value on
the work that plastic surgeons do. In practical terms, this means that plastic
surgeons are not intrinsically valued by hospitals or medical school deans, and
there is little strategic planning that occurs to enable plastic surgeons in academic medical centers. Thus, plastic surgeons do not particularly value the
resources of a major academic medical center and in turn are not themselves
valued. Why would anyone set themselves up in such a situation? Is it sheer
masochism?
Actually, there are several good reasons to pursue an academic career as a
plastic surgeon. Although these vary for each person, they generally fall into
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three distinct categories: clinical, scientific, or teaching. The clinical reasons
lie in the clinical cases that are complex enough to require the resources of an
academic medical center. These include complex microsurgical or craniofacial
operations which require specialized instrumentation (such as microscopes
or bone-plating sets) and specialized post-operative care units. These types of
cases are difficult to perform in a private practice or an office-based setting; and
if you want to focus on them, then an academic career might be a good choice
for you. It seems clear that many of the more successful academic divisions or
departments of plastic surgery are affiliated with high-volume cancer centers,
trauma centers, or children’s hospitals. These facilities provide the challenging
cases that attract excellent clinical plastic surgeons and in return provide some
of the resources to perform these cases well. Since both microsurgery and
craniofacial surgery require the resources provided by an academic medical
center, they are more tied to academic settings than many other plastic surgery
subspecialties.
The second major reason to join an academic practice in plastic surgery
is to allow one to perform research in order to improve the practice of plastic surgery or to develop new technologies to improve patient care. In some
cases, an academic practice allows the pursuit of pure basic science inquiry.
Biomedical research requires significant infrastructure such as wet laboratory
space, tissue culture hoods, microscopes, and molecular reagents as well as the
access to core animal and imaging facilities. Biomedical research also requires a
steady stream of undergraduates, graduate students, and post-doctoral fellows
who are willing to work in the laboratory for several years at a relatively low
salary in exchange for research training. These sorts of resources are primarily
found within academic medical centers or medical schools. Not surprisingly,
the vast majority of research in plastic surgery occurs within academic medical
centers. To participate in research as a principle investigator in an academic
medical center, one must usually be a faculty member. There are some ways
to participate in research from private practice, such as clinical evaluation of
new drugs or devices in industry-sponsored trials or the refinement of existing surgical procedures. However, if one is interested in pursuing fundamental
research on wound healing or ischemia–reperfusion injury, or in understanding the etiology of aging, one would be well served to consider a career in
academic plastic surgery.
The final reason that someone might choose a career in academic plastic surgery is the desire to teach and train the next generation of surgeons.
Many academic plastic surgeons count as their greatest satisfaction the transmission of clinical and scientific knowledge to their trainees. The opportunity

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to interact with young people in a residency program is an invigorating and
challenging activity. All plastic surgeons have come through a formal residency training program, generally within academic medical centers (although
there are a few that are based within private practices, such as the Long Island
Plastic Surgical Group). One of the reasons that the vast majority of training
programs occur within an academic setting is because the mechanics for reimbursing the program for the salaries of residents comes through Medicare,
which requires extensive compliance paperwork and record keeping. This is
more easily done in large hospitals with central offices covering a number of
residency programs in different disciplines; this setting fosters a close relationship between resident education and the academic medical center. For
many of the leaders in plastic surgery, the main attraction to remaining in
academic medicine is the desire to teach and instruct residents. Of course,
surgeons in private practice can regularly interact with plastic surgery trainees
as part of the clinical faculty, thus contributing an important aspect of resident
education.

Choosing an Academic Career
If clinical challenges, research, or teaching is appealing, one needs to further
consider whether a career in academic plastic surgery is the right choice. In this
section, we will review some of the prerequisites for becoming an academic
plastic surgeon and how to achieve success.
Certainly, it helps to have a strong interest in either research, teaching, or
complex surgery. However, a strong interest in and of itself is not sufficient
to guarantee a satisfying career in academics. It helps to have some level of
accomplishment and experience in one of these areas, even at the resident or
the fellow level. For someone who has a strong interest in basic science research
and wants to run a laboratory, it is necessary to have spent some dedicated
time (usually several years) doing benchwork in either a surgical or a basic
science laboratory. Tangible evidence of accomplishment, such as authorship
of papers or presentations at national meetings, is also required. Conversely,
a resident who is interested in doing complex, technically challenging plastic surgery may be best served by publishing case reports and clinical series.
Demonstration of teaching excellence can be obtained at the resident level
through teaching awards. All of the above marks of accomplishment help to
demonstrate the traits that division chiefs and department chairs look for while
recruiting potential new plastic surgery faculty members.

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Different Models for Academic Plastic Surgery
In considering your career options, keep in mind the challenge inherent in a
career in academic plastic surgery. One of the major problems is the lack of
control over most aspects of one’s professional life. Schedule, practice, and
work environment are generally beyond the control of the academic surgeon
relative to private practice. Although models differ from institution to institution, in most cases the hospital and the administrators of an academic medical
center hold significant influence over the clinical practice of an academic plastic surgeon. Depending on the model, this can be relatively unobtrusive or
extremely intrusive.
In some cases, plastic surgeons are allowed to essentially set up a private
practice either within or outside the academic medical center and strictly limit
their involvement with the medical center to discrete parts of their practice
such as burn surgery, craniofacial surgery, or microsurgery, This type of practice setup preserves a large amount of personal freedom and financial flexibility
and is, in many respects, similar to a private practice setting. Unfortunately,
this arrangement is becoming less and less common as more academic
medical centers are interested in capturing all the clinical product of their
surgical staff.
A more common situation is the academic medical center that supplies
much of the infrastructure for the academic plastic surgeon. Although convenient, it can limit the surgeon’s ability to hire and fire personnel, grow or
expand the practice, and hire new partners or relieve older partners as the
practice evolves. All of these limitations can obstruct the efficient running of
a practice, frustrating many academic plastic surgeons. In many cases, there is
a clinical productivity expectation; exceeding this monetary goal is rewarded
with a quarterly or yearly bonus. However, tracking productivity and billing
efficiency in this type of practice is difficult and leads to pseudo-information
being the basis for decision-making within plastic surgery divisions.
The most extreme version of working with a medical center’s infrastructure
is the plastic surgeon who works directly for the hospital and is paid a salary
regardless of the number of cases performed. Under this model, the academic
surgeon has very little control over his or her practice, billing, and time. In
return for a salary, the surgeon essentially performs services at the request of
the academic surgical center. Although there are no overhead costs, the surgeon is in some ways relegated to the role of an interchangeable shift worker;
these positions have high rates of turnover. Obviously, this type of system has
few incentives to increase personal efficiency or productivity, which explains

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much about the day-to-day workings of the U.S. Department of Veterans
Affairs (VA) and public hospitals.

Problems
As expected, there are differences in remuneration among these three varieties
of academic plastic surgery. In the first case, where a private practice is set up
outside of the academic setting, remuneration will not differ much from what
can be earned in private practice. Of course, the time devoted to academic
activities will be less profitable than time doing cases, so there will be a slight
deficit in terms of personal financial performance when compared to a pure
private practice model. However, this can be offset by higher reimbursements
obtained by doing difficult cases, leading in some situations to academic practitioners doing better financially than similar practitioners in the private sector.
In the other two models, depending on the fiscal performance of the academic
medical center, compensation can be significantly decreased when compared
to a private practice setting. Since the surgeons are not billing for their services
directly, their professional fees become an irresistible temptation for division
chiefs, department chairs, deans, and hospital administrators. The surgeons’
fees become a ready source of capital to correct financial shortfalls caused by
the inefficiencies of the academic medical center. This results in inefficiencies that are never corrected, causing a slow downward spiral of the medical
center with its bloated layers of middle management and wasteful operations.
These sorts of issues need to be evaluated on a case-by-case basis and even
a state-by-state basis, as there are significant regional differences in remuneration policies, care of the uninsured, regulations regarding balanced billing,
and similar issues. These regional issues can significantly impact the financial viability of plastic surgery divisions, leading to wide disparities in salaries,
administrative support, and other resources.
Aside from issues of remuneration, myriad other concerns within different academic institutions can significantly impact job satisfaction. These relate
primarily to the bureaucracy that is inherent in any large structure, which
contrasts with the solo private practitioner’s relatively lean infrastructure. In
a major academic medical center, the extensive rules for compliance with federal and state regulations typically require a significant time commitment,
resulting in less efficient time management than in a private practice setting.
For academic plastic surgeons who are interested in performing basic science research, the National Institutes of Health (NIH) has its own set of

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bureaucratic regulations governing how money can be spent and requiring
significant oversight to ensure compliance. Managing grants and fulfilling the
reporting requirements can require up to 10–20 hours per week, time that will
not be available for clinical practice. Moreover, the NIH salary support is typically far less than that obtained from clinical practice. Similarly, those involved
in training programs as the program director or chairman must adhere to
significant Accreditation Council for Graduate Medical Education (ACGME)
and Residency Review Committee (RRC) restrictions on how one can run the
residency or fellowship training program, resulting in significant compliance
paperwork. Thus, one can lose control over one’s time. In most cases, this is
offset by the unique opportunities provided by an academic career in plastic
surgery.
A final problem with academic plastic surgery is the need to advance professionally to continue participating within an academic medical center. There
is generally the expectation that, over the course of one’s career, one will
advance from an instructor to an assistant professor to an associate professor
and eventually to a full professor in plastic surgery. Depending on the specific
medical center, this can be relatively easy or exceedingly difficult. In many
cases, there is a requirement for significant academic performance to advance
throughout one’s career, especially in tenure-granting institutions. In most
places, tenure is granted at the associate professor level; some institutions
require independent NIH funding along with a set number of scholarly publications. Requirements vary tremendously among academic medical centers
and their affiliated medical schools, but for those faculty members who are
interested primarily in teaching or clinical practice, obtaining NIH funding
can be a high bar to clear. Academic requirements can limit one’s opportunities for advancement, which can be a source of frustration for the faculty.
Private practice allows one to simply grow one’s practice and increase revenues
over the course of one’s career. Academic faculty can experience a significant
amount of additional stress within an academic medical center.
These challenges, unique to an academic practice, lead to the continual
departure of many young plastic surgeons from an academic practice, which
is known as the “revolving door syndrome”. Following the completion of
training, 20–30 percent of training program graduates will enter an academic
career. Over the next five years, many will then leave out of frustration due
to the reasons described above. Many feel that they did not understand what
they were getting into when they first took an academic position. The lack of
understanding in terms of the pros and cons of an academic medical center
and an academic career often leads to disappointment and disillusionment.

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Although an academic career can be exceedingly fulfilling, it can also be frustrating, and this needs to be acknowledged prior to committing oneself.

Getting a Job
Assuming that one has an interest in pursuing a career in academic plastic
surgery, there is a well-defined process for obtaining a job. Typically in the
final year of training (chief resident year or fellowship), there are academic plastic surgery opportunities advertised through the American Society of Plastic
Surgeons (ASPS), the American Society for Aesthetic Plastic Surgery (ASAPS),
and specialist societies. As detailed above, the job solicitations must be read
very carefully as they vary greatly. Some institutions will be looking for someone to build up their laboratory efforts; while others need someone to perform
clinical work, typically in hand, craniofacial, or complex microsurgical reconstruction. It is important to know what type of job you are applying for to
avoid surprises later.
The next step is for the candidate to visit the institution so that each can
evaluate one another. If there is mutual interest, a second (and perhaps third or
fourth) visit is typically scheduled, at which point serious negotiations begin.
For someone who is interested in purely clinical practice or in teaching, the
candidate will want to evaluate the position based on factors including block
operating room (OR) time, administrative support, and the adequacy of the
salary. For someone who is interested in research, protected time and dedicated startup funds are the factors that will be absolutely essential for success.
A candidate contemplating a research-based career needs at least 50–75 percent of protected time for a period of three to five years, as well as a dedicated
annual research budget of at least US$50,000 (and ideally US$100,000) to
set up and maintain a laboratory. Dedicated and committed laboratory space
will also be required. Setting up a new faculty person for a research career is
much more expensive than hiring someone for a clinical job. For this reason,
a research position is unlikely to be offered to someone who does not already
have a significant publication record in the basic science literature. As noted
above, if one is thinking about a career in scientific investigation, it is essential
during your training to have basic science experience and publications usually
through a dedicated two-year (or longer) experience in the laboratory.
In evaluating the institution, one must be aware of the different models
through which academic plastic surgical centers are organized. Some are
departments, and some are divisions; some have a good relationship with

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the department chair of surgery, and some do not. These relationships will
factor into the long-term success of the division and of each individual faculty member. In general, it is important to have a strong chair who has the
respect of people within the medical center and within the department of
surgery. Without a strong leader, resources will invariably be removed from
the division, leading to unhappiness among the faculty.
After being recruited by the academic center, if the candidate is interested,
meaningful negotiations will begin with the chief of the division of plastic
surgery, the chairman of the department of surgery, or the dean of the school
of medicine. Everything is negotiable, and one must make sure to get what is
necessary to succeed; failure benefits no one. If all goes well, a contract will
eventually be signed, at which point the stressful part really begins. The first
few years in practice are critical for the long-term success of an academic plastic
surgeon. What you do in the first five years following graduation defines who
you will become. If you want to be a researcher, you will need to accomplish
something in research in the first five years. Likewise, if you want to be a
clinical expert, you need to become a readily available clinical surgeon and the
“go-to” person at the medical center, while also publishing clinical papers.
Failure to accomplish these things means that you will not have a long-term
academic future.
During the first five years, it is important to identify mentors and colleagues
within your division or department who can help you reach your goals. They
can be within plastic surgery or outside of plastic surgery. Meet with these
mentor figures often and seek their advice, protection, clinical guidance, etc.
It is important to have a realistic appraisal of your progress throughout the first
few years of practice so that you can make sure you are on track; a mentor can
provide this type of evaluation. Having a mentor also adds to the camaraderie
of academic plastic surgery, which is one of the nicest things about being an
academic. You can spend time with a group of people with a wide spectrum of
interests that are very different from yours, but who are able to work together
towards a common goal.

Summary
In conclusion, academic plastic surgery is not for everyone. It is a stressful
life which may be less financially remunerative than private practice, although
this is not always the case. However, if one is able to meet the demands of
excellence in clinical practice, teaching, or research, it is a rich and fulfilling

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practice that opens many doors that are not available to the private practitioner.
As in all jobs in plastic surgery, one must work extremely hard. Entering
academics passively or without a plan will certainly lead to failure and disappointment. One must go into it with eyes open and with the deck stacked for
success.

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Solo Practice
Joshua M. Korman, MD and Heather J. Furnas, MD

O

ne of the most critical and difficult decisions a plastic surgeon will make
is the type of practice to pursue. There are many factors to consider, and
many choices to weigh: academics, health maintenance organization (HMO),
small group, large multi-specialty group, employee of a large specialty group,
and solo practice. Often a surgeon’s first choice does not work out or serves
as a springboard, resulting in a change of course.
The field of plastic surgery lends itself to solo practice in part because
patients associate results so closely with the skills of a specific plastic surgeon.
Physicians in other specialties are more able to field phone calls and distribute
new patients to any doctor in a group. Parents are generally happy to be
assigned to any pediatrician in a good group, and adults are similarly thrilled to
be able to find an available internist in a well-respected group. Plastic surgery,
however, is a visual and artistic field. Patients are more likely to attribute good
results to an individual surgeon’s unique qualities. (This also makes it more
difficult to sell goodwill at the end of a career.)
According to a 2005 lifestyle survey conducted by the American Society of
Plastic Surgeons (ASPS), over half of its members are solo practitioners, while
another quarter of Society members work in small group practices (two to five
plastic surgeons) or share facilities. There may be certain traits and qualities
(creativity, entrepreneurialism, and independence) that draw a doctor to the
field of plastic surgery, and those same traits may also draw them into solo
practice.
Despite the propensity plastic surgeons have for solo practice, the changing
healthcare landscape is having a dampening effect. The April 2009 issue of
Plastic Surgery News, published by the ASPS featured, a cover story about
the growing trend of plastic surgeons considering joining group practices
in order to save money. Increased numbers allow more clout in negotiating
better deals, along with the sharing of overhead costs. While the majority of
plastic surgeons are still in solo practice, that number has fallen by 2 percent
annually for the last two and a half decades. Nonetheless, solo practice will still
be attractive to many plastic surgeons because of the lack of encumbrances,
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including working with other independent-minded plastic surgeons that can
be associated with a group practice.

Entrepreneur
The entrepreneur will naturally be attracted to a solo practice. Entrepreneurs
tend to be optimists, which helps in tolerating the financial risks taken on when
starting a practice and when making major purchases. Generally, the plastic
surgical resident is brimming with confidence in his or her future financial
prospects. We remember meeting with bankers soon before starting a private
practice, and how stunned we were to find how difficult it was to borrow
money along with the reluctance of bankers to make this crucial loan. It was
only after starting the practice and learning the phenomenon of delayed payments and “usual and customary” underpayments that we understood the
bankers’ reluctance.
As an entrepreneur, however, the solo practitioner can change his or her
practice without consensus, permission, meetings, lawyers, etc. A creative,
energetic person can take failures and impediments and turn them into opportunities for change and improvement.

Independence and Responsibility
One of the most attractive elements of a solo practice is independence. You
are truly your own boss. If you want to take Wednesdays off, you can (finances
permitting); if you need to take off early to pick up your children, you can.
Practice decisions are entirely yours. If you decide to purchase a new laser, no
one but the bank can tell you no.
The flip side of independence is responsibility. If business is slow or reimbursements are inadequate, the surgeon is the last one on the food chain to
be fed. Not taking a paycheck home for a few weeks or longer is stressful.
While everyone else in the office is working a 40-hour week, the solo practitioner is the one having to come into the office on weekends and stay late on
weeknights trying to turn things around.

You’re the Boss
As much as surgeons love to operate, if you are a solo practitioner, you have
another very important and potentially time-consuming job: being the boss.
In previous decades, being the boss was easy because the practice of medicine

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was less complicated. As the practice of medicine has become more complex,
office staffs have expanded duties, responsibilities have grown, and the job of
being a boss has grown as well.
Not all plastic surgeons are born with the gift of managing people. Those
who fall short in this skill would be wise to hire a sharp, creative, people-savvy
office manager who will, you hope, be trustworthy. Whoever manages the
practice should have people skills and psychological insightfulness. Both traits
promote a smooth-running office. Most of us were never coddled in residency,
so the idea of positive feedback, gentle education to correct errors, and team
spirit may not seem like necessary ingredients of a business. The real world is
different from a surgical residency, however, and learning to inject a dose of
patience and kindness becomes easier when you realize that happy employees
make for a better bottom line.

Networking
Being in solo practice can be lonely. Without other physicians in the practice,
it is possible that the solo practitioner is the only person in the office with a
college degree. Besides, being the boss of all the other employees requires a
certain distance between the doctor and the office staff. It is unlikely that the
boss will go out with the rest of the staff on a regular basis to “happy hour”
or to the movies. Everyone should, of course, get along, but the person who
pays the staff and can fire the staff is generally not the best candidate for an
employee’s best friend. This distance ensures that if a problem arises, it can
be resolved with less emotion.
Because being at the top can be lonely, it is important to network with
colleagues. Plastic surgical colleagues naturally have the most in common
professionally. Sometimes local relationships can be fraught with the barbs
of competition, but jealousy is best buried to allow friendships to develop. It
is ironic that the people who have the most in common often have very little
to do with each other and are sometimes incommunicado. It takes a mensch
to accept a competitor’s advertisements, success, and public promotions as a
necessity of doing business that does not cloud a friendship. Networking with
friends from one’s residency, from meetings, and from the hospital allows
sharing of practice “pearls” or advice on clinical cases, and general discussions
about plastic surgery.
Becoming involved in organized medicine, whether at the local level
or at the national specialty level, can be fulfilling while also promoting
social connections. Volunteering in local clinics, residency training programs,

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medical missions in developing countries, etc. are other ways to become part
of a larger tapestry of medicine. We are fortunate to be a part of a specialty
that allows so many opportunities.

Planning for Solo Practice
A lot of planning must go into starting one’s solo practice. Dr. Robert
Kachenmeister presents the planning process at national meetings, and an
invaluable guide is presented in the fourth chapter (“The Mechanics of
Opening Your Office”) of the ASPS publication, Reach for the Sky, edited by
John Everson as part of the Pearls of Practice series.1 Dr. Kachenmeister’s planning process is designed for the resident planning to go into solo practice, but
can be adapted by those planning to go solo after working in another venue.

Location
Where to practice is often one of the most difficult decisions to make. Of
course, the most desirable areas are the most expensive and the most competitive. On the other hand, a more remote or rural setting can be more restrictive
if, say, you are a microsurgeon and the hospital has no microsurgery program.
Once all professional aspects are considered, it is important that you feel comfortable in the community. Once you start a solo practice, it is difficult (but
not impossible) to pick up and leave to start all over again.
Once you have whittled down the area in which you would like to practice,
it is important to ferret out information about reimbursement rates from
insurance companies. Even if you plan to be a cosmetic surgeon, a cosmetic
practice can take a few years to build up; in the meantime, you will be relying on
reimbursements from insurance companies to support you. Reimbursements
vary greatly from region to region. Other costs that vary tremendously include
real estate, employee salaries, registered nurse (RN) wages, state taxes, and
malpractice coverage rates.

Hospital
Hospital privileges are important to obtain early on as there is little a surgeon
can do without access to an operating room. Find out about proctoring and
on-call requirements, if any. Proctoring can be difficult, depending on the
community, and some areas have abandoned it altogether. If there are few

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hospitals and few plastic surgeons in the area, scheduling a case in a hospital
with an available unpaid proctor can be difficult. The proctor may be reluctant
to help a new competitor become freely ensconced in the medical community. In addition to hospital on-call requirements, associated stipends and/or
reimbursements may impact your consideration of an area for opening up a
practice. Some hospitals provide a stipend to take call, while other hospitals
still require call without paying anything for the service. While a stipend may
help, especially early in one’s career, the impact that call has on one’s elective
practice, not to mention one’s personal life, must be considered.
Once a doctor agrees to be on a formal call schedule, he or she must
comply with the laws described by the Emergency Medical Treatment and
Active Labor Act (EMTALA).2,3 State laws vary regarding on-call duties. In
California, if a physician is on call for the Emergency Department (ED), he or
she is considered to be available at the hospital. Thus, taking emergency call
would obviate the ability to do surgery in one’s own facility. Exceptions are
made for surgeries done in hospitals. If the plastic surgeon (or any physician)
is on call while seeing patients in the office, the ED physicians are legally
prohibited from referring an ED patient to the plastic surgeon’s office or
other facility to be evaluated and treated. In California, any on-call physician
who is in violation of the above policies may be subject to fines of US$50,000
and possible exclusion from Medicare and Medi-Cal (California’s Medicaid)
programs, especially with repeat offenses.
Society’s tolerance for demanding and accepting superhuman work schedules of their doctors may be coming to an end. Already, residencies are officially
restricted in the number of hours that they can require their residents to work
in a week, a move supported by research on physicians-in-training.4,5 Sleep
deprivation has been demonstrated to impair physician performance. Weinger
and Ancoli-Israel’s meta-analysis indicated that recurrent sleep deprivation
impacted mood, cognition, and motor abilities.6 The liability of doing a delicate case after 24 hours of taking call and doing emergency cases will undoubtedly increase as the results of sleep deprivation studies enter the courtrooms.
While large groups may be able to allow a day of rest after a night of call, the
solo practitioner is generally not in a financial position to be able to do so.
In some communities, taking call can result in a loss of income. Patients
may be unfunded or underfunded, yet the surgeon must pay for postoperative care in his office, including staff time, dressing changes, sterilized instruments, etc. The days of financially jumpstarting one’s practice by taking call
are ending or have ended in many communities, unless a workable stipend is
provided.

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It is important to find out the economic viability of taking call in your
community before committing to a formal call schedule. Working with the
hospital for some sort of remuneration for taking call should help defray losses
and may support your practice economically. Additionally, it is important to
negotiate other aspects of on-call duties. Some hospitals have an age limit
after which physicians do not have to take call. However, medical executive
committees have been known to put a hospital’s interests foremost and can
change that age limit arbitrarily if there are too few people taking call. Oncall requirements can last until the age of 60. Another issue to negotiate is
determining who is responsible for finding on-call coverage during periods of
unavailability. Physicians have traditionally taken on this responsibility. Failure
to find coverage can result in the surgeon’s inability to attend a meeting, a
wedding, or other important events. In a small community with few other
plastic surgeons, finding coverage can be an onerous task. Hospitals have
the staff and resources that individual physicians do not have. Furthermore,
individual specialties are not required to provide call every night as long as
the hospital has a plan for treatment of a patient requiring that specialty’s care
(such as transferring the patient to another hospital).
Early on in private practice, most plastic surgeons are not saddled with the
costs of a large office, a private office ambulatory surgery center, and a large
staff. At this early stage, when the overhead is relatively low, taking call can
help pay the bills if a stipend is offered or if the demographics allow payment
for services rendered. Once the overhead increases, however, the time that call
takes away from one’s elective practice can impact the ability to generate the
income necessary just to break even. For example, if one’s overhead is $30,000
per month, the plastic surgeon needs to generate $1500 every weekday to stay
in the black. Accounting for vacations, paid staff holidays, and meetings, that
leaves even fewer work days for the plastic surgeon to generate income. If the
surgeon is available 15 work days a month, he or she must bring in an average
of $2000 per day to stay afloat. Thus, a stipend and reimbursements from
ED cases may make financial sense early in one’s practice, but later on, taking
emergency call can result in a loss of income. Find out what your on-call duties
will be not just when starting out, but a few years into your practice.
If you decide to put your name on a formal call schedule, the hospital
should have a clear schedule that has specific dates and times in which call is
taken. You could be liable if there is any question by the hospital as to who is
on call at a specific time. If another physician is covering your call for a few
hours, it is crucial that the hospital be formally informed, as failure to do so
can result in liability.

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45

Large, competitive communities will be less affected by on-call duties,
especially if call is less frequent or if it is not a money-losing activity. Taking
call is a valuable service to the community and is a great way to pick up cases,
especially when just getting started. However, it is important to make sure that
all the responsibilities and liabilities taken on by a physician are clear before
blindly agreeing to take emergency call.

Family and/or Hobby Time
As more women become plastic surgeons, as more male plastic surgeons have
working wives, and as more men in general spend more time running the home
and raising children, the amount of time one can take off is an important
consideration. Solo practice is beneficial in that the surgeon can determine
his or her own hours. Unfortunately, the overhead must be covered every
month. For women who plan to have children in the future, the most difficult
struggle is how to afford not to work during any difficulties in pregnancy and
delivery. If one is the main breadwinner, the stress is especially acute. Finding
a good childcare option is extremely important. Considerations must be made
for emergencies, cases that go later than anticipated, ED on-call duties, and
if one’s child is sick. Generally speaking, having children is not a boon to
the pocketbook, but that does not seem to deter many people from having
them. For those who want to be active in their children’s lives, the income
takes a further hit. Volunteering in schools, coaching sports teams, driving on
field trips, and being available to pick up one’s child or children after school
all take time away from professional productivity. Staying afloat financially
while devoting time to the kids requires remarkable efficiency. All these factors
should be considered before embarking on building an outpatient surgery
center or a medical spa. Those enterprises require huge monetary outlays and
have huge overheads, and their management requires a lot of time. For most
solo practitioners, it is generally best to keep the overhead as low as possible
to accommodate their families.

Developing a Practice
Some hospitals are willing to help a physician establish a practice through
loans, an income guarantee, or support in marketing and promotion. This
assistance clearly varies by community and is likely to be absent in a competitive
area. Nonetheless, a discussion with the medical staff office is worthwhile.

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A bank loan is necessary for all but a lucky few to fuel a nascent medical
practice. Banks will, of course, want to see a business plan. Drawing up a
business plan can be daunting for a person who has never started a business
before, but banks can often provide an outline to serve as a guide. Please refer
to Appendix A to find an example of a business plan outline. Society meetings,
such as those held by the ASPS and American Society for Aesthetic Plastic
Surgery (ASAPS), often have courses offered by consultants who specialize in
plastic surgery. These consultants are usually very expensive and may be out of
reach for a plastic surgeon right out of training, but they can be very helpful.
Ask for references if you decide to hire one.
Most plastic surgeons begin their practices doing emergency cases and
reconstructive surgery. Depending on one’s interests, it is important to let the
patients know of the other procedures that you do. Marketing and monitoring
can help your practice grow.
Established patients will be your best source of future revenue. Keeping
contact with them through e-newsletters, seminars, open houses, patient
appreciation events, etc. will be more cost-effective than trying to bring new
patients in from the world at large. There are a number or resources for
internal marketing, some of which are mentioned in Part II of this book.
Take advantage of them before pouring money into newspaper and Yellow
Pages advertisements.

Staff
When first starting out, the most essential person to have is a receptionist.
When patient flow is slow and there are few cosmetic patients, the receptionist
can double as a patient coordinator, giving price quotes and following up with
patients.
Training your staff is an investment in your success. Unfortunately, the
person who has spent most of his or her adult life training to be a plastic
surgeon is generally not well versed in training staff. Consultants specialize in
training. Ask around to get a personal recommendation from a colleague who
has a well-run practice.
In the past, plastic surgery practices often hired RNs to stock rooms, take
out sutures, etc. As RNs have commanded higher and higher wages in some
regions of the country, hiring one may be prohibitive. A good medical assistant
can do many of the things that an RN has historically done in a plastic surgeon’s
office. Those services that fall under the purview of an RN may be able to be
scheduled one or two days a week.

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Billing
Many practices use a billing company. The billing company collects a percentage of the physician’s reimbursements. As electronic medical records (EMRs)
become more prevalent, online billing software is becoming increasingly popular. A Google search of “medical billing software” brings up a list of different
brands of software, most of which are on-demand, Internet-based, and integrated with specialty-specific EMRs. As software is constantly improving, both
for EMRs and for billing, online reviews and personal recommendations will
help in choosing the best system.

Relationships and Referrals
In most professions, referrals are based on financial incentives. Commissions,
kickbacks, finders’ fees — call it what you will — are based on money. In
medicine, fee splitting is illegal to protect the patient from decisions based
on financial incentives. Multi-specialty groups have found legal ways around
this, since physicians within these groups refer to each other, and bonuses and
salaries come from productivity within the group.
In solo practice, referrals come from relationships, and building these relationships is important in medicine. Even in a hard, cold environment with
competitors and difficult hospitals, it is worth reaching out to physicians in
your community. When you enter a community or even if you have been there
for a while, an email or a holiday or thank-you card is worth the effort to keep
your name out there. Attending conferences in hospitals or giving talks to
groups of physicians are common ways new physicians increase their exposure in the medical community. Referrals for reconstructive procedures need
to be filtered through the insurance web of approval, but thank the referring
doctors.
In cosmetic surgery, many referrals come from other patients and allied
professionals. It is just as likely that a potential patient will listen to her hairdresser as to her internist. If you want to continue to build a network of
referral sources, it is wise to get to know personal trainers, aestheticians,
hairdressers, and other individuals who are likely to be seeing potential
patients. If you develop good relations with these people, they may permit
you to put your brochures or business cards in their places of business, which
only helps to widen your referral net. Whatever techniques you choose to use,
do not forget the code of ethics of the American Board of Plastic Surgery
(ABPS) and the ASPS. It is wise to read these because your competitors most
certainly will.

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The Business of Plastic Surgery

Is Solo Practice for You?
Although solo practice has been declining as a choice for plastic surgeons over
the last couple of decades, it is still the ideal choice for the plastic surgeon who
has a dose of optimism, an entrepreneurial bend, and a desire for independence. While the business aspect of running a practice is time-consuming, it
can also be interesting and stimulating. The highs can be very high; the lows
can be very low.
The practice the solo practitioner builds can be a strong source of pride.
As one of the last bastions of entrepreneurial medicine, it is what you make it,
and it can make for an extraordinarily rewarding career.

References
1. Everson J (ed.). Pearls of Practice: Reach for the Sky. American Society of Plastic
Surgeons (ASPS), 2007.
2. CMA ON-CALL: California Medical Association’s information-on-demand
online service (www.cmanet.org). Document #1216, Emergency Transfer Laws:
Medical Staff and On-Call Requirements.
3. Sutter Health Risk Services. Physician’s Risk Advisory, 6(2), 1998. Emergency
department on-call physician liability.
4. Lamberg L. Long hours, little sleep: Bad medicine for physicians-in-training?.
JAMA 287: 303–305, 2002.
5. Arora V, Georgitis E, Siddique J et al. Association of workload of on-call medical
interns with on-call sleep deprivation, shift duration, and participation in educational activities. JAMA 300: 1146–1153, 2008.
6. Weinger M, Ancoli-Israel S. Sleep deprivation and clinical performance, JAMA
287: 955–957, 2002.
7. Additional resource: ASPS online help (www.plasticsurgery.org) for members.

Appendix A: Business Plan Outline
1. EXECUTIVE SUMMARY
• Purpose of Plan

2. BACKGROUND

• Experience, Qualifications

3. BUSINESS CHARTER

• Description of Product(s) Service(s)
• Unique Selling Proposition
• Targeted Market Niche

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4. MARKET ANALYSIS





Characteristics
Market Factors
Competitive Evaluation
Market Potential

5. MARKETING PLAN
• Sales Forecast
• Selling Strategy





Strategy Statement
Price
Advertising and Promotion
Product/Service Warranty

6. OPERATION PLAN AND ORGANIZATION







Legal Form/Ownership
Ownership
Labor Force
Management Compensation
Training
Professional Support






Start-up Costs
Sales Forecast (Cash Flow Analysis)
Start-up Capital
Monthly Expenses

7. FINANCIAL PLAN

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The Combined Reconstructive and
Cosmetic Surgery Practice
Joseph M. Mlakar, MD, FACS

E

very work week, I deal with a full spectrum of plastic surgery patients:
newborns with cleft lip/palate, senior citizens with skin cancers, frightened women struggling with breast cancer, metal workers with slag burns in
their boots, teenage drivers with facial fractures, and the unfortunate few with
traumatic wounds. I also see young and young-at-heart women who want
tighter tummies and perkier breasts, and men and women who just want a little edge on Father Time. I am a cosmetic and reconstructive plastic surgeon,
and I love what I do.
As a plastic surgeon, I have practiced in a variety of cities and practice settings during my now 20-year career. I have worked as a part-time academician
in a private big-city group in Michigan, as a full-time academician in a Texas
specialty hospital, and as a private practitioner in both small and large groups in
an Indiana town. I have worked as a hospital-paid physician in managing two
different burn centers, and I am currently in solo practice. So which practice
setting is best? Nothing is perfect, and much depends on timing.
Few graduating plastic surgeons have the opportunity or the fortitude to
start a purely cosmetic practice. Most plastic surgeons who desire a purely
reconstructive practice will work in academic centers or in military institutions as hospital-based plastic surgeons. Development of a purely cosmetic
practice generally requires years of service, patience, persistence, and consistency, although clever marketing can fast-track an aesthetic practice in some
markets. Most U.S.-based plastic surgeons will have some form of a mixed
reconstructive and cosmetic practice throughout their professional careers.
But is it the practice that they (or you) want? Perhaps a description of my
experience can lend some perspective.
When first starting in private practice, I wanted to be busy and successful,
equating the former with the latter. I worked on any type of patient referred
to me. I worked hard to establish my professional contacts along with my
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The Business of Plastic Surgery

credibility, and I toiled long and late hours, both in the operating room (OR)
and in the office. Maxillofacial trauma and acute burn care filled my days with
adrenaline (while often interrupting my nights), and it did indeed make me
very busy. But as time passed, I came to envy colleagues who seemed to be
doing more of the types of cases that I wanted to perform and who attracted
more of the clientele that would be desirable in my own practice. I needed
to decide what type of plastic surgeon I was, and who I wanted to be. It was
important to find a method to reorganize my practice.
First, I looked at the types of surgeries I routinely performed, patients’
demographics and zip codes, referral sources, reimbursements, diagnosisrelated group (DRG) and current procedural terminology (CPT) coding,
insurance carriers, surgical schedules, monthly variations, and assorted statistics. I also looked at the amount of money coming in and the amount of
money going out. I was lost trying to sort it all out; I needed a simpler system
of analysis.
Practices have four basic components: (1) work that you love to do; (2)
work that you need to do; (3) work that you are required to do; and (4) work
that does not fit into the first three categories. For me, work that I love to do
includes those types of surgeries that hold my special aptitude and interest,
reflecting my fellowship training. These include cleft lip and palate repairs,
congenital and traumatic craniofacial reconstructions, post-burn facial reconstruction, management of patients with complicated problems, and cosmetic
nasal surgery. These are my “passions” in plastic surgery. I have a passion
for treating children with cleft lips and palates, and I am a regional expert
in facial burn reconstruction. Some of this work pays well, and some of it
does not (the state of Indiana once sent me a check of US$0.01 for a secondary cleft lip repair). I believe it is helpful for each plastic surgeon to
hold a passion and to become a regional expert in some aspect of plastic
surgery.
Work that you need to do includes any service that directly or indirectly supports your practice financially. Last year, a large bulk of my revenue was generated by breast reduction and breast reconstruction surgeries. Many patients
are referrals for skin cancers and birthmarks, which both pay poorly; but by
accepting these patients, I am providing a “goodwill” community service,
while maintaining a larger referral base and an active flow of consultations from
pediatricians, primary care physicians, dermatologists, general surgeons, and
other medical colleagues. I see many children with non-surgical plagiocephaly
in order to identify the few with surgical craniosynostosis. My obligations to

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my contracted insurance carriers require a wide range of plastic surgery services. Some of these services generate significant revenues for my practice; this
I call “pay dirt”. Most of the cosmetic surgery I perform falls into this “pay
dirt” group.
Work that I must do as a requirement of hospital privileges includes managing emergency patients admitted to the trauma center and patients with surgical complications, both my own and those of others. Many hospitals require
the plastic surgeons to rotate emergency room call under hospital contracts
in order to comply with the Emergency Medical Treatment and Active Labor
Act (EMTALA)-required hospital on-call lists. I take my turn, caring for those
who have been unfortunate, unlucky, or unwise. It is important to help those
who have suffered a surgical mishap or misfortune, and to help surgical colleagues in other disciplines with post-surgical complications as a matter of
good hospital relationships. This work I call my “politics”.
The final category includes types of cases to eliminate from your practice;
these are called “plugs”. In fishing, a plug is a lead weight, which rapidly
sinks to the bottom. In plumbing, a plug holds back the flow of water. In my
schedule, “plugs” were sinking my energy and enthusiasm for my practice in
general while slowing the flow of more rewarding or productive cases. If you
do not love it, want it, or need it, then you should not do it. Currently, I limit
my practice to surgical services as a surgical subspecialist in plastic surgery
and I avoid treating warts, hydradenitis, massive burns, pilonidal cysts, or
panniculitis in the massively obese.
This simpler system of clarification of the four P’s — passions, pay dirt,
politics, and plugs — should allow you to redirect your time and energies to
develop your ideal practice mix. You also want to make much of your pay dirt
work your passion, if possible. I no longer perform hand surgery for industrial
injuries or trauma, nor do I treat chronic wounds such as venous stasis ulcers
or pressure ulcers. I have given up acute burn admissions, critical care consultations, and traumatic microsurgery. Most importantly, I have stopped trying
to correct every surgical problem, slowly recognizing my own limitations, and
I have learned to say, “Let me refer you to someone else who specializes in
your issue.”
All plastic surgeons have their passions, pay dirt, politics, and plugs,
although they will be defined differently in each surgical practice. It is not
a static classification system, but will change constantly as a practice evolves.
Technology will evolve, as will a surgeon’s energy level and the number of
obligations. Local economic forces can also force practice mix changes.

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Developing a Mixed Practice: Schedule
Management
When starting a new practice, it takes a little while to establish a consistent
patient flow, but new plastic surgeons will generally be busy in time, and
established plastic surgeons will have enough to do in a mixed practice model
to fill their days (and occasionally their nights).
One of the practice secrets that older surgeons often fail to tell their
younger colleagues is that similar cases will attract other similar cases. As a
younger surgeon, it may be exciting to manage a gunshot wound in the middle of the night, but it leaves little time and energy to talk with the new facelift
consult patient at the end of the next day. In a group setting, if you are operating on pressure sores while your associate is doing blepharoplasties, over
time his patient-to-patient referrals will be quite different from your own.
The more facelifts you do, the more facelifts you are probably going to do in
the near future. It is another life example of the rich getting richer, at least in
terms of practice mix.
Once a surgeon is busy enough to maintain a full schedule, the next task is
to modify the schedule to include mainly the desirable cases (i.e., the passions
and the pay dirt) and reduce the less desirable cases (i.e., the politics and
the plugs). A key component of a rewarding cosmetic/reconstructive practice
is to allow time to do the types of cases that you love to do. Unless you
want your schedule to be dominated by pressure sores, chronic wounds, and
massive panniculectomies for the rest of your career, block time on your office
schedule for both your passion cases and your pay dirt cases.
Each year, I set goals within the practice including goals for personal
growth, financial growth, business growth of the practice, and educational
growth. Goals are also set for family activities, community service, and networking. After setting these goals, the office schedule is adjusted accordingly
to maintain cash flow and a revenue stream.
In my current practice, there are three main types of surgical cases, referred
to as “product lines” for purposes of preferential scheduling. These are the
three C’s: (1) cancer (and cancer reconstruction); (2) children (craniofacial
deformities/cleft lip and palate); and (3) cosmetic (“diseases of the rich”). My
fourth product line (which is not promoted) is my crisis (or acute) cases, such
as facial trauma, acute wounds, and minor burns.
The mixture of cosmetic and reconstructive patients within a surgical
practice depends mainly on patient flow and scheduling. The first rule is to

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establish adequate patient flow, and then to direct the practice mix by preferential scheduling. My office scheduling system consists of five patient care
“tracks” which all run simultaneously: (1) acute care, (2) pediatric care, (3)
cosmetic consultations, (4) reconstruction consultations, and (5) office visits
(for follow-ups or skin lesion consultations). To maximize office efficiency,
all five patient care tracks run concomitantly. I found that my ideal function
was as “director of an office orchestra”, rather than attempting to “play every
instrument” myself. Therefore, each of the five patient care tracks is managed
by a different assistant, including a physician’s assistant (PA), two nurses, a
certified medical assistant (CMA), and a finance/billing specialist. They all see
and direct patients within my practice. I am present for just a small portion of
each clinical encounter, and I float back and forth between the five tracks on
each office day (see Table 1).
The acute track is for emergency add-ons only, and requires my verbal okay
for scheduling. It functions mainly as a practice entry point for facial lacerations, facial fractures, biopsy-proven melanomas, and acute surgical wounds.
Since it is the only track for which I am singly responsible, my scheduler also
lists my surgical cases on this track for the entire week, allowing me to check
my weekly surgical schedule with a single button click on my office schedule.
The pediatric track is managed by a PA, and includes new patient consultations for all patients less than 10 years old and all follow-up visits. On
my surgery days, my PA is scheduled independently to see follow-up visits to
reduce my patient volume load on the office visit track.
The cosmetic track is managed by my cosmetic care coordinator, who is
a full-time registered nurse. Currently, this coordinator happens to be my
wife, but that is a different story altogether. The cosmetic care coordinator manages all cosmetic patient inquiries, schedules new cosmetic appointments, sees all new cosmetic consultations, schedules cosmetic surgeries,
and coordinates surgical planning. She also schedules and coordinates nonsurgical cosmetic treatments, including chemical peels, Botox® , and dermal
injectables.
The reconstructive track is managed by a part-time nurse who functions
as the reconstructive care coordinator. She sees only new patient consultations and pre-operative visits. Special appointment time blocks are reserved
for newly diagnosed breast cancer patients. Since these patients all require
insurance predetermination prior to surgical scheduling, the part-time nurse is
supported by full-time, back office personnel who manage insurance approvals
and surgical scheduling.

May 6, 2010

Mohs Defect

Abdominoplasty
Blepharoplasty

“D”
Reconstructive
(Ashley)

Breast Reconstruction
(immediate and
delayed)
Blue Peel
Blepharoplasty
(non-cosmetic)
Body Lift
Breast Implant Removal
Breast Reduction
All patients < 10 yrs old, Brachioplasty
Breast Augmentation
Gynecomastia
including but not
Breast Implant Exchange Panniculectomy
limited to:
Birthmark
Breast Implant Removal Wound
Burn Reconstruction
Brow Lift

“E”
Post-op/Follow-up
(Shannon)
1 Post-op
Follow-up
Skin Lesion/Scar
Revision

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Facial Fracture

“C”
Cosmetic
(Lori)

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Surgical Wounds

“B”
Pediatric
(Darlene)

The Business of Plastic Surgery

“A”
Acute

Patient care tracks.

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Table 1.

Skin Cancer Consults
(requires path report or
derm referral)

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(Continued)

May 6, 2010

“A”
Acute

“C”
Cosmetic
(Lori)

Cleft Lip/Palate
Craniosynostosis

Buttock Lift
Cheek/Chin/Lip
Implant
Facelift
Fat Injection
Laser Resurfacing
Liposuction
Mastopexy
Breast Lift
Otoplasty
Rhinoplasty
Thigh Lift

Plagiocephaly
Polydactyly/Syndactyly
Scar Revision
Skin Lesion

∗∗∗ We must have records

from referring
physician prior to
scheduling appt, unless
a physician’s office
initiates the referral.

“E”
Post-op/Follow-up
(Shannon)

b902-ch04

Botox — cosmetic
procedure
Radiesse — cosmetic
procedure
Restylane — cosmetic
procedure

“D”
Reconstructive
(Ashley)

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“B”
Pediatric
(Darlene)

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templated and should
not be used often. It
is only for true acute
appts. Appts should
be made at the
beginning or end of
office hours.

(Continued)

The Combined Reconstructive and Cosmetic Surgery Practice

∗∗∗ This column is not

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Table 1.

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The office visit track is managed by a CMA, and includes follow-up visits
for both cosmetic and reconstructive patients as well as consultations with
new patients with facial lesions, non-melanoma skin cancers, or scars.
There are preprinted forms, questionnaires, consents, and instructions for
each of these product lines. Each staff member is empowered to be a patient
educator within her clinical track. My office staff members provide the majority of the face-to-face communication with our patients. Trust is our most
valuable commodity. Adequate time allowance for each patient encounter is
essential to earn patient trust by conveying competence, confidence, and compassion. New patient consultations are scheduled for an hour or more with our
care coordinators. My time is typically less than 20 minutes. Staying timely in
each of the tracks requires good communication during office days, and each
coordinator is responsible for timeliness.
Some tracks have fuller schedules than others. For example, if a woman
calls next week for a tummy tuck consultation, she can generally get a new
patient appointment on the cosmetic track within two or three weeks. In
my experience, many cosmetic patients will not wait more than three weeks
and may seek services elsewhere. We always make certain to have adequate
inflow into this track and will borrow time from elsewhere to keep cosmetic
consultation scheduling wait times shorter. A prominent plastic surgeon from
La Jolla runs his office with three cosmetic patient care coordinators.
The scheduling wait times on the reconstructive track are much longer. If
a referral is completed for a breast reduction consultation, our current waiting
list is about three to four months, and the consultation is not scheduled until
all supporting documentation is received. In my view, this is a reasonable
wait interval for a patient who has had macromastia for two or more years
prior to seeking treatment. As our reconstructive reimbursements continue
to diminish, preferential scheduling is also a practice management necessity
to maintain an optimal cash flow. Within the reconstructive track, we have a
monthly quota for each case type, spreading selected types of services over
several weeks to maintain adequate patient flow and better cash flow. This
strategy is consistent with maintaining a mixed practice.
We maintain special openings in our schedule for acute breast reconstructions, acute biopsy-proven skin cancer patients, and fresh facial fractures. These
exceptions assure that an initial consultation delay does not contribute to a
long-term bad outcome from a life-altering illness or injury. The acute track
can also be used as a “safety valve” entrance point into our busy office schedule, allowing easy periodic review and schedule modifications as necessary. If
all of the tracks get busy or the patient volume increases significantly, then it

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59

will be time to add new associates. At the present time, we are able to provide
for the needs of our patients and still maintain a positive flow and interaction
within the practice (see Tables 2 and 3).

Making Money in a Combined
Cosmetic/Reconstructive Practice
Within the plastic surgery practice, the formula for generating revenue is
straightforward: the more time that the surgeon performs actual surgery, the
greater the revenue made. More than 90 percent of my practice revenues are
generated in the OR. Therefore, for scheduling efficiency, I now have three
full, uninterrupted operating days in the middle of the work week. This schedule also allows me to maximize efficiency in the OR, as opposed to attempting
Table 2.
"A"
Acute
8:00 AM
8:15 AM
8:30 AM
8:45 AM
9:00 AM
9:15 AM
9:30 AM
9:45 AM
10:00 AM
10:15 AM
10:30 AM
10:45 AM
11:00 AM
11:15 AM
11:30 AM
11:45 AM
12:00 PM
12:15 PM
12:30 PM
12:45 PM
1:00 PM
1:15 PM
1:30 PM
1:45 PM
2:00 PM
2:15 PM
2:30 PM
2:45 PM
3:00 PM
3:15 PM
3:30 PM
3:45 PM
4:00 PM
4:15 PM
4:30 PM
4:45 PM
5:00 PM

Sample schedule for Monday.

"B"
Pediatric
(Darlene)
BLOCK

Peds PO / Follow-up
New Pediatric
Consult
Peds Pre-op/2nd Consult

"C"
Cosmetic
(Lori)
Cosmetic Pre-op /
2nd Consult/MIRROR

Breast Reconstruction
Consult

New Cosmetic
Consult
Reconstructive Pre-op
Cosmetic Pre-op/
2nd Consult/MIRROR

Peds PO / Follow-up
Peds PO / Follow-up
New Pediatric
Consult
Peds PO / Follow-up

"D"
Reconstructive
(Ashley)

BLOCK
New Reconstructive
Consult

New Cosmetic
Consult
Reconstructive Pre-op

"E"
Post-op / Follow-up
(Shannon)
1st Post-Op
Follow-up
Skin Cancer Consult
Follow-up
1st Post-Op
Follow-up
Skin Lesion Consult
BLOCK
1st Post-Op
Follow-up
Follow-up
Follow-up
Skin Lesion Consult
Follow-up
Follow-up
Follow-up

LUNCH

2nd & 4th Mondays:

1st & 3rd Mondays:
Office Minor

1st Post-Op

Office Minor

1st Post-Op

Office Minor

1st Post-Op

Cosmetic Procedures
BLOCK

(Injectables, Blue Peels)

Office Minor

1st Post-Op

Office Minor

1st Post-Op
Skin Cancer Consult

BLOCK

BLOCK

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Table 3.
"A"
Acute

8:00 AM
8:15 AM
8:30 AM
8:45 AM
9:00 AM
9:15 AM
9:30 AM
9:45 AM
10:00 AM
10:15 AM
10:30 AM
10:45 AM
11:00 AM
11:15 AM
11:30 AM
11:45 AM
12:00 PM
12:15 PM
12:30 PM
12:45 PM
1:00 PM
1:15 PM
1:30 PM
1:45 PM
2:00 PM
2:15 PM
2:30 PM
2:45 PM
3:00 PM
3:15 PM
3:30 PM
3:45 PM
4:00 PM
4:15 PM
4:30 PM
4:45 PM
5:00 PM

Sample schedule for Friday.

"B"
Pediatric
(Darlene)
BLOCK

Peds Pre-op/
2nd Consult
Peds PO/Follow-up
Peds PO/Follow-up

"C"
Cosmetic
(Lori)
Cosmetic Pre-op/
2nd Consult/MIRROR

New Cosmetic
Consult

"D"
Reconstructive
(Ashley)
New Reconstructive
Consult

Reconstructive Pre-op

New Reconstructive
Consult

New Pediatric
Consult
Peds PO/Follow-up
Peds PO/Follow-up

New Cosmetic
Consult

New Pediatric
Consult

Cosmetic Pre-op/
2nd Consult/MIRROR

Reconstructive Pre-op
BLOCK

"E"
Post-op / Follow-up
(Shannon)
1st Post-Op
Follow-up
Follow-up
Follow-up
1st Post-Op
Follow-up
Skin Lesion Consult
Skin Cancer Consult
1st Post-Op
Follow-up
Follow-up
Follow-up
Skin Lesion Consult
Follow-up
Skin Cancer Consult
Follow-up

LUNCH

BLOCK

4

New Reconstructive
Consult

Peds PO/Follow-up
Peds Pre-op/
2nd Consult
Peds PO/Follow-up
Peds PO/Follow-up

New Cosmetic
Consult

BLOCK

New Cosmetic
Consult

Breast Reconstruction
Consult

12

5

7

Reconstructive Pre-op

1st Post-Op
Follow-up
Follow-up
Follow-up
Follow-up
Follow-up
Follow-up
Follow-up
BLOCK

21

TOTAL
49

to split my office and OR days, as I did in my previous practice settings, which
proved to be impractical. My present schedule allows me to see patients in the
office on Mondays and Fridays, which reduces patient care calls and hospital
rounding needs on weekends. I currently see patients in the office one-anda-half days a week, and each half-day that I see patients in the office generates
a full operative day.
The last half-day is used for minor office procedures and injectables, which
has become a financial boon to my practice. If scheduled efficiently, Botox
injections can generate more revenue than a breast reduction surgery during
the same time interval. My physician fee for Botox injection is US$125 per
25-unit syringe, and I can treat four to six patients per hour. By comparison, the current reimbursement by the state of Indiana for a breast reduction
surgery, which is typically a three-hour operation, is approximately US$900–
US$1,200. It does not take a mathematician to see where this goes.

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So, if cosmetic surgery is more lucrative, why do reconstructive surgery
at all? It is a choice that most plastic surgeons will need to make in the lifetime of their professional practice. For me, my reconstructive practice keeps
me involved in a number of specialty areas within the broad scope of plastic
surgery, providing measurable intrinsic rewards other than revenue. Doing
reconstructive surgery also allows a balanced practice that will be more adaptable in changing financial and socioeconomic times.
Many rewarding surgeries are not high-revenue producers, such as cleft lip
and cleft palate repairs. Currently in U.S. states, government payers provide
about US$300 for a cleft lip repair and US$400 for a cleft palate repair, which
means a lot of time and energy for very little remuneration. However, the
reward is in the smiles of the thankful patients and parents. Reconstructive
surgery can also be a powerful marketing tool, promoting cosmetic referrals
from other sources for a successful reconstructive plastic surgeon.
Initially, in beginning a new plastic surgery practice, it may prove beneficial
to join as many insurance contracts as a provider as possible. This provides for
a steady stream of referrals from some of the lower-reimbursing insurance
carriers, which may be overlooked by established plastic surgery practices.
It also directs patients from surgical colleagues or primary care physicians
who have otherwise firmly established referral patterns. Nonetheless, in time,
a plastic surgeon can become more selective in the reconstructive services
provided as patient volumes increase. As the practice grows, practice revenues
may be increased by eliminating the slower-paying or lower-paying insurance
carrier contracts, thus optimizing remuneration independent of the volume of
cases. In a growing plastic surgery practice, the rules for insurance contracts
are simple: keep what pays, and eliminate what does not.
My exceptions for these elimination rules are the two government payers,
Medicare and Medicaid, which separately comprise my two largest billing
write-offs. More than 80 percent of the children that we treat with a cleft lip
and palate anomaly have Medicaid as their primary source of funding, and I will
continue to serve the needs of these children despite poor reimbursements.
The future of a national health care system will depend not just on a guarantee
to all citizens of the right to acceptable surgical care, but also on an acceptable
remuneration for surgical services paid to practicing surgeons.
Practice mix, insurance mix, and billing efficiencies determine annual revenue. If a practice is purely cosmetic, this would translate into higher revenues.
However, in a mixed practice, only a portion of charges will be collected.
Changing the mix will change the collection. The final formula is simple:
money earned (revenue) minus money spent (overhead) equals the practice

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profit. Increased earnings come by increasing the volume of patients, rates
of reimbursement, hours worked, or non-contracted prices. Reduced overhead comes from reducing employees, benefits, supplies, number of services
offered, or physician salary. In a group practice setting, plastic surgeons can
additionally alter individual earnings by altering referrals within the practice,
reducing money paid to less productive associates, increasing revenue sharing
with more productive associates, or increasing pre-tax allocations, depending
on the practice-sharing model. It is a matter of determining where priorities lie.
In life, making the most money and dying with the biggest house or car
does not necessarily add to patterns of happiness. He or she who dies with
the most toys does not win. Most doctrines strive for life balance. A mixed
practice allows for that.

Avoiding Fraud
When a patient presents for a cosmetic surgical treatment, a straightforward
financial transaction generally ensues. A discussion is held about expectations. Options and limitations of services are discussed. Prices are delineated.
Financing options are reviewed. A 10-percent deposit is required prior to
scheduling. The balance is due 10 days prior to the surgical event. If the
balance is not paid in time, the procedure is canceled or postponed. Late
cancellations incur a loss of the deposit.
We do offer financing to our patients. Financing for us in our region has
become a good source of patient referral. Many plastic surgeons are reluctant
to offer financing for patients because they do not wish to accept a reduced percentage of their cosmetic fees. For us, cosmetic financing allows our potential
patients to check on their financing before they have a consultation. Nobody
wants to come in and talk to the surgeon only to find out that the services
offered are not something that they can afford. That is when insurance fraud
can come into play.
Within a mixed reconstructive and cosmetic practice, one of the greatest
concerns is avoiding fraud or the appearance of fraud. Many patients seeking
a cosmetic result will attempt to get services covered under their insurance
carriers. There was a time when surgeons might have participated and assisted
patients in this endeavor to secure insurance coverage. This is no longer a wise
clinical practice. It hurts the patient, it potentially hurts the surgeon, and it
hurts the reputation of the surgical specialty. It is also not fair to the insurance
industry.

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In cases that have a cosmetic component, we always identify the cosmetic
component for both the patient and the insurance carrier at the time of submitting documentation for predetermination prior to the surgical treatment.
Common cases that have both cosmetic and surgical components include septorhinoplasties, blepharoplasties, abdominal wall hernia repairs, panniculectomies, breast capsular contracture treatments, breast implant ruptures and
exchanges, varicose vein treatments, and occasionally breast reductions.
Revision or staged surgeries in breast reconstruction may have a cosmetic
component, such as replacing initial implants with bigger implants at the time
of nipple/areola reconstruction after a mastectomy.
We always talk candidly and openly with the patient about the cosmetic
component of proposed surgical treatments, and about predetermination
communications with the insurance carrier. The patients are always responsible for a percentage of the facility fee, a percentage of the anesthesia fee, and
a cosmetic component fee for the primary surgeon in these combined reconstructive/cosmetic cases. Times are carefully documented during the surgical
treatment by the circulating nurse in the OR for functional and cosmetic components of an operative adventure. The patients are responsible if there is an
underestimation of time taken for the cosmetic component for any surgical
treatment.
If a cosmetic component is present, then fighting with insurance carriers
to have an entire procedure covered as reconstruction is never a good idea. We
just bill the patient the difference. This has two advantages: (1) the surgeon is
less likely to be accused of fraud; and (2) the procedure actually becomes more
profitable for the surgeon, especially if the surgeon is a contracted provider.
Below are two examples to illustrate the point.
In septorhinoplasties, the functional portion of the operation includes
(1) straightening the septum, (2) opening and stabilizing an airway, and
(3) straightening a crooked nose. The cosmetic portion of the same operative
procedure includes (4) reduction of a dorsal hump and/or (5) modification,
recontouring, or reduction of a nasal tip. The surgeon’s fee for the cosmetic
portion of a septorhinoplasty is a clear and distinct fee, in addition to the
charges for functional nasal surgery, and is outlined as such on all communications with the patient and the insurance carrier. If the patient chooses
not to pay, then no external nasal changes are performed except for nasal
straightening. Most patients choose to pay the additional cosmetic fees.
For a panniculectomy, the functional component is removal of the hanging panniculus and dissection and treatment of removal of tissues below the
umbilicus. In a low-hanging panniculus resection, the umbilicus is removed

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simply to avoid an umbilicus adjacent to the suprapubic scar, which is very
deforming. Additionally, functional surgery may include a ventral hernia repair
if present (a primary diagnosis of a ventral hernia is always made by a referring
surgeon or a referring primary care physician, and is never a primary diagnosis that is made in our practice). However, if the patient desires additional
abdominal wall dissection in excess of a panniculectomy or a ventral hernia
repair (such as freeing of the tissue above the umbilicus, abdominal fascial
plication, or reconstruction of an umbilicus), then this portion is billed separately as a cosmetic component. To simplify our explanation for our patients,
a separate cosmetic fee is required to rebuild the umbilicus following most
panniculectomies in our patients. Otherwise, if the patients do not wish to
cover the cost of this fee, then the umbilicus is not rebuilt. Umbilicus reconstruction increases the risk of abdominal flap necrosis and is generally avoided
during massive panniculectomies, especially if partial vulvectomy is required
to achieve an acceptable end result.
We will only see patients for a ventral hernia repair if they are considering a
cosmetic tummy tuck at the same time. If a patient requests a consultation for
a ventral hernia repair without a tummy tuck, he or she is referred for a general surgery consultation and generally is not seen in our practice. I will treat
difficult abdominal wall reconstruction patients by component separation if
they have been properly evaluated and referred by a general or a colorectal
surgeon. If the patient desires a tummy tuck at the time of a hernia repair or
a hysterectomy, he or she is charged a full cosmetic tummy tuck fee, including anesthesia and facility costs. I no longer see patients for routine ventral
hernia repairs unless those hernias are an unfortunate result of TRAM flap
reconstruction, either my own or those of others.
Blepharoplasty patients are always required to have verification of visual
field testing from an optometrist or an ophthalmologist prior to scheduling a
consultation for functional treatment. Patients who wish to forego visual field
testing prior to consultation are billed initially for cosmetic consultations. It
is rare to see patients receive insurance coverage for lower lid blepharoplasties
unless a severe ectropion is present with epiphora.
For breast reduction patients, office scheduling requires a written referral by the patient’s primary care physician or a gynecologist, following
documented failed conservative treatment for at least six months and a
patient weight of less than 350 lbs. No patients are seen for breast reduction consultation in our reconstructive track unless adequate documentation
is received for at least two of the following: (1) documented physical therapy or chiropractor treatment; (2) documented skin care or dermatologic

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treatment; (3) documented spinal pain treatment with medication and/or
surgery; and/or (4) documented weight loss program or bariatric surgery. All
patients seen for breast reductions are warned that insurance carriers require
patients to have been on a dedicated six-month program for weight loss,
physical therapy, and/or chiropractic services. I never reference nomograms
or graphs of published tables to determine what insurance requires for predetermination approval, nor do I try to guess at resection weights. Estimation
of grams removed from patients is always based on patient measurements in
standard published formulas (such as the one below). We no longer fight
insurance carriers on behalf of patients to get their breast reduction surgery
covered under their insurance plans. We do offer competitive rates for cosmetic
breast reduction services to patients who are not covered by their insurance
carriers.
Estimation of Reduction Weight (in Grams)
= 35.4 × Clavicle-to-Nipple Distance (in cm) − 60.66

× Nipple-to-Inframammary Crease Distance − 1234

Gynecomastia breast reductions in male patients who are 21 years of age or
older are considered cosmetic surgeries. Once patients fall outside pediatric
guidelines, gynecomastia is generally considered to be a product of aging
and/or obesity and is managed as a cosmetic consultation or treatment.

Making Reconstructive Surgery More
Profitable
Breast reconstruction has remained a mainstay of the reconstructive plastic
surgery practice, but reimbursement for breast reconstruction from the insurance carriers has diminished through the years. In my practice, third-party
insurance carriers routinely no longer cover tertiary operations, revision operations, or the management of complications following breast reconstruction.
In a mixed reconstructive and cosmetic practice, time taken for breast reconstruction is time taken away from cosmetic surgery, diminishing practice profits. Sadly, in some cities, affected women are finding it increasingly difficult
to find plastic surgeons who perform breast reconstruction or who participate
with their insurance plan, except through university medical centers.
In my practice area, the need for breast reconstruction is great, but remuneration per hour of treatment is marginal at best. Therefore, my goals in
breast reconstruction are to bolster the spirit of an emotionally distraught

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cancer victim and to restore a surgically absent breast. My primary practice
goal is to limit my complications in breast reconstruction, which takes precedence over pursuit of the perfect form and figure.
In order to limit my complications, I no longer perform TRAM flaps in
patients who are massively obese (BMI > 32), smokers, or insulin-dependent
diabetics. In my hands, these patients often will have partial flap necrosis and
require multiple surgeries. I no longer use placement of silicone implants
in immediate breast reconstructions, with or without AlloDerm, following
mastectomy. I find that many patients still develop capsular contractures given
this approach, and tissue expansion allows for a safer option. I always inform all
of my breast reconstruction patients that breast reconstruction is a two-stage
or three-stage surgical process, regardless of the type of reconstruction. This
allows me to make secondary adjustments, and it helps to keep the patients
comfortable with the whole reconstructive process.
My first option for the majority of these patients has remained tissue
expander and implants, which is provided to 70 percent of my patients. In
smokers, this is commonly performed in conjunction with a latissimus flap.
I limit TRAM flaps to young, healthy, ideal candidates only. In my hands,
TRAM flaps are rarely performed at the time of primary mastectomy, but are
performed following completion of radiation therapy when required. I no
longer offer free flap reconstruction for breast reconstruction, but refer ideal
candidates to university centers. In the private practice setting, free flap breast
reconstructions do not provide adequate remuneration for the time required
and the risk assumed.
In the treatment of skin cancers and lesions, we have separate entry tracks
within the practice for proven malignant (versus benign) skin lesions. Patients
with benign lesions often wait for months if they need an appointment in our
office visit track. However, prices are available for cosmetic lesion removals,
and patients can access our cosmetic track much more easily. All of these lesions
are removed in an office setting. We receive poor insurance reimbursements
for removal of non-cancerous skin lesions and therefore have limited patient
access for this surgical service.
We limit our follow-up in those patients with benign skin lesions. If the
lesion is proven benign, a single operative visit is all that is offered. If the
lesion is malignant, visits are done at one week, three months, and six months
following surgical treatment. The patient is then referred back to the primary
care physician or referring dermatologist for long-term follow-up.
Within the combined cosmetic/reconstructive practice, certain types of
problems can often be managed in specialty clinics, including cleft lip/palate

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teams, craniofacial teams, burn clinics, wound care clinics, melanoma clinics,
breast cancer clinics, bariatric/weight loss clinics, and hand clinics. Hospitalbased programs have a number of advantages for plastic surgeons. They allow
for collegial interaction and collaboration, optimizing a team approach for
difficult-to-manage patients. Hospitals often pay plastic surgeons an administrative stipend for leading a team or directing a program, which supplements
clinical service revenues. The hospital also assumes costs for supplies, specialized equipment, marketing, and personnel/nursing, which reduces the
overhead burden for the physician. Hospital-based clinics are also able to bill
patients’ insurance for dressing supplies and nursing services, independent of
physician evaluation and management (E/M) fees, and can capture funding
for supplies that the private physician cannot. For this reason, private-based
plastic surgeons cannot fiscally compete with hospital-based wound care or
burn care clinics.

Managing Emergency Room Coverage
There was a time when calls and referrals from the emergency room (ER) were
a sought-after portion of every budding plastic surgeon’s revenue stream. In
some cities, plastic surgeons would fight to get on the call schedule as a way
of being visible within the medical community, building a referral base, and
developing a clinical practice. Unfortunately, those times are gone. Practice
risks for managing emergency department patients are higher than those for
managing patients in an elective setting. The average ER client is not as desirable as that in one’s elective practice. The working hours are horrific. The
reimbursement is lower. In short, life as a plastic surgeon in the ER typically
sucks.
Most established plastic surgeons try to limit their access and the services
they provide through the ER. I have made a personal creed that I no longer
sew up drunken people at two o’clock in the morning. The wound can be
managed with an open, moist gauze dressing. This allows time for the patient
to be stabilized, fully evaluated, and placed on the surgical schedule the next
morning or the next day.
We work within our community to share the workload. Each plastic
surgeon with hospital privileges is required to participate in an EMTALArequired call list, and to share the burden of non-contracted patients arriving
for referral through the ER. The system is not perfect, as many of the services
we provide overlap with those of other specialties.

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In many communities, the current direction for ER coverage of trauma
patients includes contracting patient care services by surgical services, especially general surgery, neurosurgery, and orthopedic surgery. It is important
that if one type of surgical specialist receives remuneration for covering trauma
services, then that needs to apply to all surgical services. The growing trend
is that plastic surgeons nationwide are receiving a stipend for covering call at
their local trauma hospital emergency department.

Avoiding Practice Burnout
Within any certain surgical field or human endeavor, the possibility of burnout
or fatigue within the surgical specialty remains. I think burnout occurs within
our specialty whether we are in an academic reconstructive practice, a highly
lucrative cosmetic practice, or a mixed cosmetic/reconstructive practice. Many
well-known and well-respected plastic surgeons within our field have reached
this point in their lives or careers and have taken their own lives. This is a
tragedy.
It is important to recognize the signs of burnout in oneself. These can
include chronic fatigue, loss of enjoyment, increasing drug or alcohol use,
loss of libido, extramarital sexual affairs, chronic frustration, or helplessness.
Maintaining a well-rounded practice, setting goals for personal development,
and taking time to renew and reflect are all part of successful practice management. This mantra holds true for the young surgeon and the old surgeon
alike.
We will continue to anticipate diminishing insurance reimbursements. We
will continue to live in a publish-or-perish university atmosphere. There will
always be a difference between adrenaline surgery and elective surgery. It is
important to make lifestyle and practice choices that will reflect a steady and
healthy lifestyle as we move forward.
One way to avoid burnout is to keep evolving as surgeons. For plastic
surgeons, this means monitoring results. To avoid habits of self-deception, we
can take and maintain adequate photo-documentation and then share those
photos with our colleagues at local and national meetings. All surgeons have a
bell-shaped curve distribution of their surgical outcomes. All of us have great
results, and all of us have poor results. As we mature in practices, our hope
and goal is to move the bell-shaped curve to the right and to narrow it so that
we get more consistent results.
For myself, I try to view my patients as ambassadors. Focusing on interactions with individual patients keeps me focused on what my mission and

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calling is within medicine currently. A practice is hard to build and slow to
change, but easy to break. I believe that I need to touch enough lives in a
positive way to be a successful surgeon.
I no longer worry about my reputation, which is a nebulous web of truths,
half-truths, lies, deceptions, misconceptions, mysteries, and legends, all generated about an individual in the web of social interaction. I do worry about
maintaining my character and integrity. It has been said that what we are actually doing with each patient interaction is selling trust to our patients. In the
same vein, I avoid gaming insurance carriers.
Reconstructive surgery offers me an opportunity to feel like I can make a
difference in the world at large. This includes my volunteerism and community
service as a whole. My reconstructive practice is marketing for my cosmetic
practice. My current thought is that the best way to increase my revenue is to
reduce my costs and to increase my efficiency within my surgical and office
practice.
In summary, a mixed cosmetic and reconstructive practice is the initial,
normal evolution of all surgeons as they leave the university setting, either
from training or from an academic faculty position. A reconstructive practice
can include a mix of insurance and self-pay patients. My reconstructive practice
keeps me involved in a number of areas within the specialty of plastic surgery
that give me intrinsic rewards other than revenue. My cosmetic practice allows
me to better control my revenue stream, and I have improved my lifestyle by
not relying on third-party payers. My balance of reconstructive and cosmetic
plastic surgery will, I hope, allow my practice to be more adaptable in these
changing financial and socioeconomic times.

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Making a Living in Reconstructive
Surgery
Steven P. Davison∗, DDS, MD, FACS
and Mark W. Clemens, MD

Introduction

N

o book on the business of plastic surgery would be complete without a
chapter on reconstructive surgery. The debate between self-pay cosmetic
versus insurance-reimbursed reconstruction work has been contemplated for
decades as fees for each have diverged. The goals of this chapter are to
(1) compare the pros and cons of a reconstructive practice; (2) evaluate
financials from a single-specialty group practice in Washington, D.C., as a
case study; (3) break down the phases in reconstructive practice, including
billing; and (4) demonstrate how to make a living practicing reconstructive
surgery.

Surgery trends
According to the most recent data,1 the growth of the cosmetic surgery market
is overly exaggerated. The Hollywood, or “Nip/Tuck” effect is not reflected
in the numbers. There was a 283-percent increase in cosmetic procedures
from June 1992 to 2006; however, it has since stagnated. The growth from
2000 to 2006 was 32 percent, but that from 2005 to 2006 was 2 percent.
Although numbers are not yet available, it is highly likely that the recession of
2008–2009 has seen a significant drop in cosmetic surgery. In 2007, 1.9 million cosmetic procedures per year were performed, compared with 5.3 million
reconstructions. The reconstructive market itself has shrunk, down 15 percent
from 2000, although plastic surgery has maintained a higher percentage compared with other disciplines.

∗ Steven P. Davison is the primary author of this chapter, so any references made in the first person

(e.g., “I”, “my”) refer to him.

71

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Why a reconstructive practice?
Reconstructive surgery is relatively safe and steady, and can be considered as
the bond holdings in a diversified investment portfolio. There is a ready patient
pool with less competition, particularly from other plastic surgeons. Plastic
surgeons are still the single largest competition for other plastic surgeons.
(However, there are variations based on geographic region. For example, in
northern California, physicians in some private practices earn less wage plus
benefits per hour worked compared with registered nurses. Regional reimbursement rates and the cost of living will determine how safe and steady a
reconstructive practice is).
Because reconstructive surgery itself is diversified, it has potentially lower
economic risk. A survey by the American Society of Plastic Surgeons (ASPS) in
Plastic Surgery News reported a dip from 20 percent to 50 percent for cosmetic
procedures. As discussed in Plastic Surgery News, “retooling” for a reconstruction is harder than it may seem. The time and effort to develop a referral pattern to re-educate and join provider panels is not insignificant.2 The cosmetic
surgery market can be affected by a market collapse, a 9/11-like effect, or
other local or global factors. Reconstruction can see a slight dip in elective
procedures based on co-insurance or the loss of insurance, but this is nowhere
as drastic as in cosmetic surgery. However, some reconstructive procedures are
affected by other factors. In Northern California, one practice performed 70
breast reductions per year; after health maintenance organizations (HMOs)
tightened the gate-keeping system by penalizing primary care doctors for all
patient care costs, that practice had only six referrals the next year.
Obviously, the reconstructive market is not insular, but it has more breadth
and options than relying on self-pay services. An advantage of a reconstructive
practice is less of a need for an advertising budget, as compared with a cosmetic surgery practice. This may vary by region. Highly competitive areas may
benefit from advertising; however, classic physician relationships and referrals
are more valuable. Unlike other specialties such as facial plastic surgery, where
a gulf exists between general ENT (ear, nose, and throat) and facial plastics, effective branding of the scope of our practice makes the transition from
reconstructive to cosmetic surgery seamless. The ASPS has worked hard to
market plastic surgery as a diverse and inclusive spectrum of care. A patient
who comes in for one procedure or consult is less likely to be surprised that a
plastic surgeon performs other procedures that are applicable to them or other
members of their family. For example, it is not surprising that a plastic surgeon
will perform a breast reduction, remove a mole, or repair a laceration, yet at

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73

the same time offer to provide liposuction. A reconstructive practice allows
the new surgeon to build a molehill into a mountain by respecting the triple
A’s: availability, affability, and ability (in that order). Moreover, self-pay or cosmetic procedures can be added at no additional costs to the practice. Large
reconstructive cases provide downstream operations; this we describe as the
“pipeline effect”.

Remuneration myth
The relative value unit (RVU) is a comparison of production in medicine.
It combines the three components of work, practice expense, and risk value
component. Medicare and insurance companies base remuneration on a dollar conversion of RVU. Depending on the year, the Medicare conversion is
around US$35 per RVU, although there are regional and state differences in
RVU reimbursement. This is related to the risk (malpractice cost) and practice
components of the RVU calculation. A procedure in Manhattan pays greater
than one in South Carolina, as the practice expenses are greater in Manhattan.
Yet inequalities do exist: a procedure in Manhattan may pay disproportionately
more than one in Long Island. Medicare is broken down into 17 geographic
zones that were determined decades ago. Some areas that were previously
rural are now urban with a higher cost of living, but the reimbursements are
still at rural rates, which create inequalities.
Plastic surgery as a specialty does very well. Our coding and reimbursement committees have aggressively promoted our worth to the ResourceBased Relative Value Scale (RBRVS) Update Committee (RUC), the body
responsible for RVUs, and they have staunchly defended our reimbursement
rates. The RVU for a heart transplant is 69.31; while the RVU for a bony free
flap, such as a fibula, is higher at 72.32. The RVU for an appendectomy is
15.38, whereas that for a local flap we might perform in the office is 17.64.
These actual numbers reflect the value we have maintained compared to other
specialties.

Predictions
Although no crystal ball exists, it is likely that fees for cosmetic surgery will
decrease due to increased competition, deregulation to allow dentists to perform cosmetic procedures, and the “Wal-Mart” effect. A comparison of facial
plastic and plastic surgical fees shows that plastic surgery prices are higher. It is
highly likely that reconstructive fees will also decrease. Medicare is a balanced

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system. There is a finite amount of money, calculated on the Gross National
Product, which is divided by all RVUs billed to obtain the conversion rate in
dollars. Left alone, there would be a steady decrease in this rate as utilization
rises. As most insurance fees are tagged to Medicare, private fees will follow
Medicare and go down.

Hourly rates
To structure a practice, it is helpful to think of hourly rates of income and cash
as shown in Fig. 1.
When one considers revisions, complications, and staged surgery, there is
a fundamental difference between cosmetic and reconstructive surgery. For
reconstructive surgery, one still charges for revisions, stages, and in most cases
complications. This then generates US$750 an hour. Revisions for cosmetic
surgery may not be billed, depending on the reason for the revision and the
surgeon’s practice policy. If so, it now costs the practice to do the revisions and,
at a minimum, US$650 an hour (or the equivalent of overhead) is required
to run the practice without generating income. In reality, it can be even more
expensive if operating room (OR) time and anesthesia are required and the
surgeon absorbs those costs (Fig. 2).
How pay-for-performance will affect this is unknown. Hospital charges
for certain “avoidable” complications, such as infections and decubitus, are
being denied. At present, no global policy on denying reimbursement for
complications or revisions exists. However, in some areas such as California,
revisions are denied for reimbursement. One way to circumvent this issue is
to ensure that modifier 58 for staged surgery is applied.

Fig. 1. Estimates of production rates (in US dollars) for different types of care in my practice.
Source: Nextec Billing, Washington, D.C., 2008 data.

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Fig. 2.

75

Revision of hourly rates (in US dollars).

E/M services
An office with increased evaluation and management (E/M) reimbursement
and in-office procedures generates real income. In my practice, it is US$300
per hour. E/M codes are the cognitive codes that identify non-procedural
physician services. They are found in the 99-series of codes. Categories exist for
different sites of service (inpatient versus outpatient), different types of E/M
consultation requested by another health care provider, and new patient visits
versus follow-up visits for established patients. As the shift in reimbursement
to cognitive specialties has occurred, the relative reimbursement for this type
of service has increased.
The income derived from E/M reimbursement or billing for consultations
cannot be underestimated. Cosmetic consults are often billed at no charge or
only a token charge. Actual consultation charges when another physician sends
a patient can generate fees for an office day that more than cover the overhead.
However, efficiency and accuracy are crucial. Electronic charting systems help
facilitate adequate documentation requirements.

Self-worth
Dollars and cents do not account for the psychological benefit of performing
reconstructive surgery. When one does reconstruction, there are phases of
improvement which reinforce themselves: good results mean that grateful
patients come back for follow-up visits, which in turn boost the surgeon’s
self-worth. We have seen in cosmetic surgery that mostly unhappy patients
return for continued follow-up appointments. Happy patients return for their
post-op, possibly for fillers, and for the next time they need a procedure. They
generally are not coming for scheduled follow-up visits as this would inundate
a cosmetic schedule with non-fee visits. They do not keep regular maintenance

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appointments like melanoma patients or breast reconstruction patients. As
such, there is a shift toward seeing a higher percentage of dissatisfied patients.
This is emotionally draining and time-consuming. Because of time and gravity,
cosmetic results only get worse with time: more lines, relapse, or ptosis. This
sentiment is mirrored in a recent article in Plastic Surgery News. The author
makes the point that the dissatisfied patient with unrealistic expectations can
be a drain:
Rhytidectomy, a rather dramatic operation, can lead to stunning
postoperative results. Of course complications from facelifts can be
stunning too — especially to the patient who thought she could
take a few days off to recuperate from the procedure and return to
life looking refreshed, not grotesque. But it’s more than just the
obvious complications such as hematoma, necrotic post-auricular
skin and facial nerve injuries that disturb some patients. It’s often
much smaller problems such as the latitude of healing — what many
of the patient’s friends interpret as “flaws” — that keep a patient
coming back to the plastic surgeon’s office to complain for months
after the procedure. For the physician, this ongoing process can
feel like a surgical version of “waterboarding” — slow, steady, and
repetitious jabs at the surgeon in the exam room that don’t ever
seem to reach a conclusion.3

The breast reconstructive patient is an interesting hybrid, as they start as
a reconstructive patient and end as a cosmetic one. Revisions are a frequently
covered expense, depending on the insurance company and the geographic
region.

Conclusion
A reconstructive or mixed practice has benefits. Reconstructive surgery is still
a growing market that can be developed without advertising that pays for
revisions and bestows self-worth to the surgeon.

Practice Analysis
We will review the results from a single group of seven surgeons (six plastic
and one podiatric) from Washington, D.C., during the financial year 2005,
as set forth in Figs. 3–5. Within this group, which is part of a multi-specialty
academic practice plan, one surgeon had a 75/25-percent reconstructive mix,
two surgeons had a 75/25-percent cosmetic mix, and four surgeons were

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Fig. 3. Production for a seven-person single-specialty group. Total = US$16.75 million. Source:
Washington, D.C., 2006 data.

Fig. 4. Collection rates for the seven-person group. The full-time equivalent was US$980,000
in reconstructive collections per surgeon. Source: Washington, D.C., 2006 data.

nearly 100% reconstructive. Although based predominantly at one academic
hospital, they provided services at a Virginia satellite office and surrounding
community hospitals.
This group billed a total of US$16.75 million, US$14.83 million of which
was for reconstructive surgery. However, just US$5 million was collected for
these services. The reconstructive collection rate was 30 percent, with a payerdependent mix. The results show that the full-time equivalent for a reconstructive surgeon in this practice was US$980,000 in gross income.
The factors that affected this gross income were analyzed. The value of
the E/M codes was very important: this surgical practice collected US$1.65
million, or 24 percent of their gross income, from seeing patients in the office
or in hospital consultation rather than in the OR. As E/M codes constitute

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Fig. 5. The group collection rate overall was 42 percent, with reconstruction 30 percent. Some
self-pay was written off as returns or bad debt. Source: Washington, D.C., 2006 data.

most doctors’ bread and butter, a larger portion of remuneration has shifted to
them as RVUs have been adjusted. One should not ignore this revenue stream.
Document and bill for your cognitive time. The majority of the income,
76 percent, came from surgery, whereas 24 percent came from the office.
Considering the time spent, an average of two days in the clinic and three
days in the OR, the remuneration for each service is not so disparate. If they
had equal monetary value, the ratio would only be 40/60 and not 24/76.
The group had a high degree of specialization in practice type — breast,
head and neck, or limb — which increased efficiency. The volume of patients
was high: 26,500 patient interactions with 3,137 operations. Services that
were expensive to provide in terms of manpower and supplies, such as
those at the wound-healing center, were shifted to the hospital. This was
a win–win situation, as the hospital derived US$43 million in down-feed
business (explained below) and hospital inpatient volume. The wound center
generated more than 1,000 cases per year for one surgeon. Due to the value
of wound care patients, the hospital covered the cost of institution-provided
residents as well as the support for mid-level providers. This extra manpower
functioned as workforce multipliers to increase productivity beyond what any
individual could do.
Down-feed business is the work and income stream the hospital derives
from core admission or surgery. This includes the laboratory, radiology, subsequent consults, additional procedures, and facility fees. The wound center
generated US$43 million in this down-feed for the hospital. As hospital collections are more favorable than physician collections, it is fair to say that
revenue from the wound center constituted at least 5 percent of the hospital’s

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eventual revenue. This type of financial and political clout allows a surgeon to
obtain hospital support for his or her program.
In a very revealing paper on economic factors affecting head and neck
reconstructive surgery, Dr. Deleyiannis showed that his hospital collected an
average of US$44,153 compared with his fees of US$2,300.60.4 The profit
margin on 58 patients was more than US$1 million. This revenue stream gives
leverage to obtain financial support from hospitals to provide time-consuming,
intensive reconstructive services. In the case we described above, the hospital’s
profit from microsurgery allowed a salary support of US$50,000 for one of
our microsurgeons.

Conclusion
Our group practice derived US$980,000 per full-time equivalent from reconstructive surgery. Twenty-four percent of this was derived from E/M services.

Maximizing Reconstructive Surgery
Non-participation
The most effective way to maximize remuneration per case is not to participate
in insurance plans. There are a number of ways to achieve this: (1) become
famous and offer real or perceived exclusive services; (2) have geographical
control with no competition; or (3) provide emergency room (ER) coverage and hospital consults. However, the third option is the most difficult to
achieve without becoming the tow truck of plastic surgery, which is to say
that patients use you only when they are stranded. The problem in the ER is
disclosure of your participation or non-participation and patient expectation.
This is worsened as ER consults include those that are both medically necessary and socially demanded. If a patient demands a plastic surgeon to sew up
little Johnny’s laceration, would they still do so if they knew that the plastic
surgeon does not accept insurance and the service will be out of pocket? This
argument is moot if the patient is uninsured.5 Californians should be aware
that, as of January 2009, the California Supreme Court determined that nonparticipating physicians cannot balance bill HMO patients for charges beyond
what HMOs pay out-of-network physicians. So, not participating in California
is not financially beneficial for ER work.
Non-participation is not the same as not accepting insurance; rather, it
means that you do not contract and agree to accept a lower fee. The hardest

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group with which to avoid participation is the Blues (Blue Cross and Blue
Shield). They make it difficult by corresponding and sending Explanations of
Benefits (EOBs) and checks only to the patient. Although fees paid to outof-network providers can be significantly higher than those paid to network
providers, it is up to the physician to bill the patient and to pursue the collection of the balance of the charges. Patients may not understand the process or
they may cash the check they receive from their HMO. Fees can be negotiated
in advance with individual payers or patients. If the insurance payment is less
than that negotiated amount, then the patient can be balance-billed. It is a
legal requirement to bill the patient but not to collect. Thus, higher payments
can compensate for lower balance collections.

Secondary market
Through reputation and results, one can develop a secondary revision market
in reconstructive surgery. This includes revision of reconstructions, cosmetic
complications, or the dissatisfied patient. The advantage of this market is that
it is self-selected and pre-sold often out of network and/or out of pocket.
Figure 6 shows a breakdown of our group’s insurance reimbursements, which
will help set expectations.

Carve-outs
Carve-outs are services that are not contracted at standard rates but are
individually negotiated. The best example currently is deep inferior epigastric
perforator (DIEP) flaps. To do carve-outs, one needs a track record of

Fig. 6. Reconstruction collection rates by insurance type. Workman’s compensation is the highest payer, but has the longest lag in payment (up to a year).

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specialized service and quality outcomes with volume and success. It requires
constant vigilance of payments and a commitment to drop out of insurance
participation if the insurer does not want to negotiate reimbursement rates.
In addition, it requires a realistic expectation of what the service is worth.
Demanding US$25,000 for a service for which Medicare pays US$2,600 will
not engender long-term success or even respect.6

Emergency rooms
One has to analyze emergency rooms objectively. Busy does not mean profitable, as the payer mix can be terrible. Hospitals have Emergency Medical
Treatment and Active Labor Act (EMTALA) requirements to provide ER coverage of specialty services if their hospital has those services available.5 This
means that there is the possibility of per diem coverage from hospital funds to
pay for services. The adage of “available, affable, and able” may not pertain
to the ER. The changing climate of uninsured, higher-risk patients no longer
makes the ER a referral source; it has been replaced by the provider list. A glaring example of the injustice I have experienced is caring for a Kaiser patient
one night who was promptly transferred to one of their surgeons the next
morning. This is considered common practice, as Kaiser seeks to minimize
its costs while delivering care. Yet for the individual on call who is covering
Kaiser’s patients, I believe it is inappropriate. Such practice can in turn lead
to bad behavior as patients may be rushed to the OR before the case can be
snatched away.

Efficiency
This is essential. Your currency is not surgery; it is time — what you can get
done in a certain amount of time. Centralization requires bringing patients
to you, thus reducing your hospital commutes and locations. On the other
hand, you will need to maintain enough hospital affiliations to afford yourself
multiple options. No OR time means no productivity. Block time is obviously
a maximization of time.
Waste other people’s time, not your own. Make sure you are operating, not
waiting. Do Mohs reconstructions the day after the resection so that you are
not delayed by the dermatologist who must make multiple passes. The room
with the 7:30 a.m. first case of the day is often the only room that runs on
time. Consider doing a case before or after clinic hours so that the turnover
does not waste your time. Avoid add-on cases, and minimize turnover by

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scheduling similar cases in a block. This reduces staff expenses and speeds
turnover, as long as there are adequate instruments. A joke among surgeons
at the academic hospital is that the fastest way to improve turnover is to drive
to the community hospital for your second case. Work in parallel, not in series.
Doing one case after another is not as productive as doing a case in one room
(A) while an extirpative surgeon removes a lesion in another room (B). When
you are needed, you finish case A, move to case B, and eliminate downtime.
Doing all of your cases in one room, particularly if you are doing combined
cases with another specialist, is an incredible waste of your time. Stagger cases
so that the set-up and take-down overlap with a second room. If a fellow or a
second surgeon is available to help in a combined case, use him or her to do
a case during your unproductive time, i.e., during the extirpation. Consider
rounding or seeing consults between cases. We have found that a resident has
many values; however, speeding up the work in the OR is not one of them.
A surgical first assistant, a physician’s assistant, or a second surgeon is more
efficient.
I schedule my major reconstructions to follow my elective schedule so
that I am not sitting around waiting on the oncology surgeon. Raising the
flap while the oncology surgeon is working is another option. To run a system in parallel requires organization and very good communication with your
scheduler, who must be able to visualize delays, the time the other surgeon
takes, your speed, etc.
Nonetheless, I always expect delays. I bring a rolling office to do paperwork
so that the unit of productivity — time — is not wasted. The unreliable patient
should never again be given prime OR time and instead should be scheduled
at the end of the day. A deposit of the patient’s deductible can discourage a
no-show. Case cancellations result in a financial loss for the surgeon, as time
is your unit of productivity. Time is money. Because reconstructive patients
have no financial risk, I use an airline model: I overbook the flight. If the
week is heavily scheduled with 10 percent too much, the inevitable no-show
or cancellation does not leave holes. If holes do appear, it is time to vacuum
the hospital for all those cases you have delayed or avoided.

Paperwork
Attention to details is essential for pre- and post-production paperwork.
The preauthorization/predetermination process is critical. Watch for hidden
loopholes such as the need for a sign-off by the primary care physician. If the
predetermination is not airtight, do not proceed. Rather, get a peer review and
close the loop. A peer-to-peer review is a higher level of predetermination by

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a physician affiliated with the insurance company. Normally, a nurse reviewer
renders the “yes” or “no”, but discussing your case with an MD can be far
more fruitful. This review must be done prior to the operation. Give freebies
to the patient and not to insurance companies. You can perform “dog ear”
removal, liposuction, and touch-ups gratis, but bill insurance companies for
everything that is reconstructive. As the second, third, and fourth codes are
discounted 50, 50, and 80 percent, respectively, find the largest encompassing
code and bill it first. Understand coding rules. Consider it mandatory to take
a coding course and the business courses given at national meetings.
It is very likely that the person reviewing your bill has limited education
and training. Help give them the answers by dictating codes and Current
Procedural Terminology (CPT) numbers on the first page of your operative
report, allowing you to maximize your reimbursement. Collect copays and
deductibles, which are steadily rising as percentages of the fees. The average
copay is now US$25 and the individual deductible is as high as US$1,000.
Some practices collect the patient’s deductible at the front desk as a prepay,
since the average cost to send a bill is US$12. Staff can smoothly and inoffensively do this at the time the patient has the procedure (not after), since you
cannot repo the surgery.

Accuracy
This is a fundamental ingredient in the patient billing process, and it begins
at the earliest interaction. Verification of social security number, spelling, and
benefits maximizes clean claims. An analysis of a rejection report identifies
what claims get rejected. Our own rejection reports from insurance companies
confirm that inaccuracy costs money.
The majority are small errors such as an incorrect spelling of the insured’s
name. A great example of this is billing through TRICARE for a military
dependent. One must reference the active duty family member’s social security number, not the patient’s. If you bill under the patient, the system does
not recognize the charge. Missing preauthorizations and poor use of modifiers (particularly when additional exams or procedures are done in the global
period) all affect collections.

Conclusion
Accuracy is essential and is most dependent on intrinsic factors of the practice.
Any small error will derail the process. A more competitive environment will
erode reimbursement and the amount you can generate.

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It is possible to very successfully provide only reconstructive care in the
right geographical area with remuneration of around US$1 million per year.
The intrinsic factors that you can control are (1) organization; (2) efficiency;
(3) volume and availability; (4) an accurate billing process; and (5) a reconciliation process. Time, rather than surgery, is the currency of a reconstructive
practice. In turn, time is indeed money.

Post-Production
The last phase is post-production, or how to maximize remuneration through
collection. The most important tools are education and accuracy. Understanding coding and billing is a key component. A coding workshop or course
is highly recommended. In addition, CPT codes, the RBRVS guide from
Medicare, and a guide to black box edits (or payment exclusions based on the
particular code or combination of codes submitted) are very helpful. All are
available through the ASPS.6,7,8
The goal in coding is to match International Classification of Diseases
(ICD-9) codes to CPT codes. The ICD-9 codes are a series of three-, four-,
or five-digit codes to describe diseases. The first three digits placed in front of
the decimal describe the disease (e.g., 873, laceration). The next two digits
placed after the decimal designate the site or the severity (e.g., 873.4, scalp
laceration; or 873.50, multiple complex laceration, face). The CPT codes are a
series of codes which identify all procedures and are grouped in system-based
categories: skin, musculoskeletal, cardiovascular, respiratory, etc. Within these
groups, the codes tend to be listed from cephalic to caudal. For example, in
the digestive system, the lips are at the beginning and the anus is at the end.
The two must match: you cannot submit a bill for a breast procedure with
a diagnosis of Crohn’s disease. These matches can be done by manual crossreferencing or a computer program.

Coding
When coding, accuracy to ensure clean claims is important. Unbundling is
illegal and counterproductive. Bill for what is not included, but do not doublebill. Maximize modifiers, particularly when applying E/M codes with procedures, subsequent visits, or operations in the global period. For example, if you
perform a procedure the same day as an office visit, add -25. If you perform
the surgery the same day of or the day after a consult, add -57 which designates
surgical decision-making.

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The most important modifiers in plastic surgery are the following: (1) -59,
separate procedure at a different site, used to identify a procedure that was
not included. For example, 11443-59 (lesion removal) was not included in
14040 (local tissue rearrangement); (2) -51, procedure tied to another procedure. An example is 15100 (skin graft) and 15002-51 for a debrided wound
in preparation for a skin graft; (3) -22, complex or unusual procedure. This
should be reserved for extremely difficult or extraordinary situations and supported by an operative report, since it often leads to a manual review; (4) -52,
reduced service for procedures; (5) -57, surgical decision-making on same
day. Normally, visits 24 hours prior to a case (e.g., to obtain consent) are
denied; but if it results in a decision to operate, add -57; (6) -50, bilateral
procedure; (7) -58, staged procedures. This is for timely staged planned procedures within 90 days; (8) -78, complication with a return to the OR; and
(9) -79, new operation for a different reason in 90 days, e.g., to take the
patient back to the OR within 90 days after a breast reduction to remove a
melanoma.
Accuracy in coding can make a substantial financial difference. Without
education, surgeons will most likely use generic codes, which are the simplest to locate and remember. Site-specific 2-series codes for incision and
drainage yield five-fold the remuneration of generic codes. For example,
decubitus care has specific codes to cover debridement. A debridement of
skin, subcutaneous tissue, muscle, and bone (11044) has an RVU of 8.2
(US$293). Yet code 15937, excision of sacral decubitus with osteotomy, is
more accurate and bills at a higher rate of 25.45 (US$939).7 This three-fold
increase is an important difference if you are to run a profitable reconstructive
practice.
An example is the code 10061, incision and drainage, non-specific/
complex, which pales in comparison to a site-specific code such as incision and
drainage of the chest (21501) or shoulder (23030) taken from the musculoskeletal section. This reflects a substantial lost opportunity cost. An excellent
source is the coding reports by Dr. Janevicius.6
Add-on codes demand a mention. There are procedures in reconstructive
surgery that have add-on codes which cannot be billed independently, necessitating a link to a primary code. It is important to bill for these services, as
they are not discounted like other procedures. An example of an add-on code
is the mesh placement code (45968) which has to be billed after a primary
hernia or abdomen debridement code. Another example is a code to bill for
Lymphazurin injections in melanoma (38792). If you perform this service,
why not bill the additional RVU of A9535 per case?

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Supplies
The cost of some reconstructive supplies can be substantial. They need to be
billed independently using A or J codes, even if not all carriers pay (e.g., J3301
Kenalog). Supplies that are very expensive or difficult to get reimbursed should
be flowed through a hospital. Examples are gold weights, custom implants,
therapeutic Botox, and medical leeches. The source for correct coding of
supplies is the Healthcare Common Procedure Coding System (HCPCS)
guidebook.9

Back-end billing
The operative report is primarily a medical document, but it is secondarily a
legal and financial document. Dictate ICD and CPT codes and modifiers on
the front page.
The goal is to facilitate the insurance company to pay. Give the insurance
clerks all the data they need to pay the claim, like post-operative diagnosis
with ICD-9 codes. A description of the surgery’s procedure, broken down
with CPT codes and a list of modifiers, provides no excuse for the insurance
processors to deny your claim based on documentation. They would then
have to read the body of the text to refute, rather than support, your bill.
Black box edits are very specific exclusions that one CPT code cannot be
billed with another CPT code. This is a preemptive step to reduce overbilling
for procedures that are included in another procedure. An example is that a
spreader graft (30465) cannot be billed with a septoplasty (30520) as they are,
respectively, in each other’s black box edits. It is important to differentiate if
one procedure was performed on another side or contralateral side so that
you can get reimbursed. An example is 19120, mass removal right breast,
and 19318, reduction left breast. Without modifiers to identify (-59) separate
lesion and left or right side, an automatic denial would occur.
I examine my own mail, read EOBs, and review payment posting with my
biller. Set a monthly meeting with your billing service. Nothing in life will
get accomplished unless you set a deadline. Having looked back over billing
records, I have found that it is not uncommon to see activity on accounts only
the day before our meeting. The following process of reconciliation is very
valuable. Speedy coding and billing eliminates late charges. A delay causes an
increase in payment lag time, and an increase in lag time is an interest-free
loan for the insurance company. A maximum of 40 days in payment lag is a
goal.10 Medicare should pay within three weeks. One of the paradoxical things

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about the Centers for Medicare and Medicaid Services (CMS) is that they are
incredibly efficient with electronic submissions, direct deposits, and automatic
payments and denials. This has led to CMS having the lowest overhead costs
(3%) compared with market norms of close to 20%.

Referrals
There are three sources for referrals: (1) patients, (2) doctors, and (3) payer
(insurance) panels. The first referral source, patients, you maximize by delivering service; the last source, payer panels, you maximize through your participation on the panel. This leaves the second referral source: other doctors.
It is naïve to consider that referrals are sent to the best surgeon. Although you
have to provide good surgery, it is not that simple. Ask yourself why doctors
should send you patients. Look at it from their perspective. The following is a
list of questions: (1) Is it easier to send my patients to Dr. A or to Dr. B? The
answer may be as simple as which office answers the phone or whether the
referring physician can speak with you directly; (2) Am I kept in the loop as the
referring physician? This is a major criticism of academic centers; (3) Service:
does the doctor take care of pre-op, post-op, and rehab, or do those jobs
end up back on my lap?; (4) Does the doctor make me look knowledgeable
by providing me with feedback? Referring physicians do not want to appear
naïve about their patients’ care. They want copies of laboratory and pathology
reports sent to them; and (5) What financial benefit or reciprocity do I have?
Does this doctor send me patients? Am I a preferred provider for them? When
you care for your referrer’s patients, make sure you do not send their patients
to an alternative provider within their specialty!
We keep a list of doctors in our network of referrals and make sure we
do not have one-way, take–take relationships. This impacts your referrals of
doctors more than anything.

Conclusion
Accuracy and education in back-end billing are critical. A 40-day lag in
collection is the goal.

Summary
It is possible to make a living in reconstructive surgery with some organization.
The remuneration per full-time equivalent can be up to US$1 million for a

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productive practice. There is still a growing market for plastic surgeons in
reconstructive surgery. It provides diversification and some stability in market
fluctuations that are absent in cosmetic surgery.
The way to maximize a reconstructive practice is to compartmentalize the
process. The pre- and post-production phases, including contract negotiation
and the billing process, can influence remuneration as much as the work done.
In these phases, accuracy is essential and education (particularly in back-end
billing) can make an enormous difference. The productive phase, which the
surgeon directly influences, is where time is money. Time, rather than surgery,
is the currency. Maximize time. The intrinsics that the surgeon can control are
(1) volume of work done, (2) efficiency and productivity of the time used, (3)
specialization and repetition to decrease wasted energy, and (4) maximization
of access and availability to ensure future referral.

References
1. American Society of Plastic Surgeons. Statistics 2007. Available at www.asps.com.
2. Leonardo J. Could bringing balance to your practice offer an economic cure-all?
Plast Surg News 20(2): 1, 22, 2009.
3. Haeck P. Facelift claims avoided through patience, time and re-operations. Plast
Surg News 20(6): 1, 16, 2009.
4. Deleyiannis FW, Porter AC. Economic factors affecting head and neck reconstructive microsurgery: the surgeons’ and hospital’s perspective. Plast Reconstr
Surg 120(1): 157–65, 2007.
5. Davison S. Emergency room coverage: an evolving crisis. Plast Reconstr Surg
114(2): 453–7, 2004.
6. Janevicius R. So why is there no CPT code for DIEP flap procedures [CPT
Corner]? Plast Surg News 20(2): 8, 24, 2009.
7. Contexo Media. Coding and Billing for Plastic Surgery/Dermatology. Contexo
Media, New York, NY, 2009.
8. HCFA discontinues secret edits for Medicare claims. American Medical News
10(2), 2000.
9. American Medical Association. HCPCS 2009: Medicare’s National Level II Codes.
American Medical Association, New York, NY, 2009.
10. Lander R, Martin V. Your guide to better coding. Medical Economics 85(10):
34–9, 2008.

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Pursuing a Career at Kaiser
Permanente
Robert Pearl, MD

W

hen I completed my residency in plastic and reconstructive surgery, I
was interested in almost every aspect of reconstructive plastic surgery.
Uncertain of the exact type of practice I was seeking, my plan had been to
volunteer for a year in Central and South America. In the middle of my chief
residency, I received a call from the chief of plastic surgery at one of the Kaiser
Permanente medical centers. Although I had not done any rotations at Kaiser
Permanente, I was aware of the program and knew other plastic surgeons
who had taken positions in various locations. He told me that there had been
a tragic plane crash and that one of the plastic surgeons in his medical center
had died. He asked if I was willing to lend a hand for a few months, until
they could recruit another individual. It seemed a simple request, and what
harm could there be in delaying the trip for a short time period? In fact,
I never left Kaiser Permanente. The choice of career often takes the most
unexpected turns.
To understand the value of a career in Kaiser Permanente, physicians should understand the organization’s structure, leadership design, and
mission-driven culture. Although the term “Kaiser Permanente” is used to
describe the totality of the care provided to patients, in actuality there are
three separate organizations which together integrate a not-for-profit health
plan with a prepaid, multi-specialty medical group and a not-for-profit hospital
system.
Kaiser Foundation Health Plan, a community-based, not-for-profit insurance company, is similar to other community-based, not-for-profit entities. It
donates hundreds of millions of dollars a year to community benefit programs,
care for the uninsured, and medical education. It is distinguished among insurers by the fact that it uses a much smaller percentage of the premiums it collects
for the administration of the health plan operations and allocates an unusually
high percentage of the dues it collects for direct patient care.
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There are eight regions in the United States, and each has an independent
physician Permanente Medical Group. As a consequence of the independence
of each Permanente Medical Group, there are minor variations in different
geographies; but overall, practicing in large, multi-specialty medical groups is
relatively similar in the various Kaiser regions. An important aspect of working at Kaiser is not only to provide excellent medical care, but also to maximize disease prevention. Most of the perspectives in this chapter will reflect
those of Northern California’s The Permanente Medical Group (TPMG), the
largest medical group in the nation with over 6,000 physicians and 25,000
staff. TPMG (one of eight Permanente Medical Groups across the U.S.) was
founded 60 years ago and, under California law, is a professional corporation
similar to most physician groups. TPMG is independent from, and an equal
partner to, Kaiser Foundation Health Plan and Kaiser Foundation Hospitals.
It has its own Board of Directors, all of whom are practicing physicians, half
elected by their colleagues and half selected based on their administrative
accountabilities.
The consequence of TPMG’s size and structure is that it is an equal partner
to the health plan and the hospital organization, rather than being under the
control of either one. This makes TPMG self-governed and self-managed,
which is unique among other large medical groups in the country and distinctly different from solo or small community practices. As a result, physicians report only to physicians, and there are no health plan administrators
from whom physicians need to obtain authorization for care. This is a major
attraction to physicians who value their independence and influence, which
do not exist in other settings.
In 1933, a young surgeon named Dr. Sidney Garfield was hired by the
industrialist Henry Kaiser to go into the Mojave Desert to provide medical care
to the workers building the California Aqueduct. It was out of that experience
that Kaiser Permanente came into existence. Although health care in the 21st
century is dramatically different than it was 75 years ago, many of the principles
established by Dr. Garfield remain the foundation for the program today.
When Dr. Garfield began to provide health care to the construction workers on the project, he realized that he faced a major financial challenge. Workers
in their early 20s would travel to Los Angeles on payday, and when they
returned they no longer had the money required to pay for their medical
care. Facing potential bankruptcy, he introduced a radically new proposal —
prepayment — as the solution to this dilemma, and he convinced Henry Kaiser
to support his innovative approach. For a nickel a day per worker and another
nickel for their respective families, he would provide all their healthcare

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needs. Prepayment aligned the interests of the patients and the physicians,
rewarding both through disease prevention. Dr. Garfield would walk around
the work site, knocking down protruding nails, since in this pre-antibiotic
era an infected puncture wound was often fatal. Although the tools and
approaches have expanded immensely from those earliest days, commitment
to prevention remains a focus for Kaiser Permanente 70 years later.
In contrast to Dr. Garfield who provided medical care using only one
12-bed hospital in the Mojave Desert, Kaiser Permanente today has over
30 hospitals with close to 10,000 beds, and yet many of the principles and
approaches remain the same. The combination of an integrated financing
approach, a high-quality medical group, and an associated hospital continues
to define Kaiser Permanente across nine states and the District of Columbia.
Although Kaiser Permanente is similar to other organizations with large multispecialty medical groups, such as the Mayo Clinic, the comprehensiveness of
Kaiser Permanente’s integration and its 21st-century advanced IT systems
make it unique.
For plastic surgeons who begin a career in Kaiser Permanente, many aspects
of their day are identical to what it would be like working in the community,
but others are dramatically different. What is most similar is the nature of
their clinical practice. The work day typically starts with hospital rounds on
inpatients and then continues either in the operating room or in the office.
The mix of clinical cases is different in that the overwhelming majority of the
work is reconstructive, rather than cosmetic. In addition, being part of a large
group of colleagues makes the experience more similar to an academic practice
rather than that of a solo practitioner. Individuals coming out of residency or
fellowship enjoy the camaraderie of going into an adjacent operating room to
watch another surgeon operate, rather than feeling isolated or even perceiving
the surgeon in the next room to be a competitor. Physicians who join Kaiser
Permanente directly from training programs are encouraged to ask for assistance from clinical experts, whether in the same specialty or a different one.
Even the most recently hired individuals can be confident they will obtain
the needed expertise easily. This experience contributes to the high level of
personal and professional satisfaction which TPMG physicians report today.
In the office, the Kaiser Permanente physician has the freedom to schedule
surgery, hospitalize a patient, or order any test or medication without having
to complete paperwork or call for health plan authorization. The expectations are that the quality will be outstanding and that personalized service
will be provided. There are no individual financial incentives tied to utilization. Performance expectations are set by clinical peer experts, not health plan

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actuaries. This approach supports physicians in delivering optimal quality in
the most effective ways possible.
One advantage of practicing in a large, well-established medical group in
which physicians are salaried is the freedom from financial worries associated
with covering an office overhead. As members of a large group, physicians are
expected to help their colleagues whether they need assistance in the office
or operating room or for coverage when colleagues are away. It means that
all physicians are accountable not only to their patients, but also to their
associates, which means that they may need to be available to provide medical
care on some occasions when they would rather be doing something else.
As in any large company, every physician is allocated a certain amount of
vacation time. Additional time away can be taken without pay, provided there
is coverage to ensure access for patients.
For many physicians, practicing in Kaiser Permanente combines the best of
academia and community medicine. They enjoy spending most of their time
on clinical practice, but they can also do research, teach residents, and/or
take on important leadership roles. Each of these opportunities is possible
and can be traced back to the visionary leadership of Dr. Garfield nearly 40
years ago. In the 1960s, Dr. Garfield and Dr. Morrie Collen established the
Kaiser Permanente Division of Research. Today, it is the largest research facility
in the country outside of a university setting. It receives over US$50 million
a year in grants; participates in several of the largest National Institutes of
Health (NIH) projects; and recently undertook the nation’s most ambitious
research effort to understand the link between genetics, disease, and the environment. Kaiser Permanente’s Research Program on Genes, Environment,
and Health, aims at establishing the largest human genetics database in the
world. By comparing DNA sequences with clinical outcomes, researchers
hope to determine whether particular diseases have an inherited or an environmentally associated medical etiology. In addition, individual research
grants are provided to clinician researchers to study questions of particular interest to them. Expert research support is provided, beginning with
Institutional Review Board (IRB) approval through manuscript preparation
and submission.
In the late 1940s, Dr. Garfield and his associates established residencies to educate the next generation of physicians. Dr. Garfield recognized
that residents would need to be trained not just to be clinically and technically excellent, but also to become broad systems thinkers. Today, Kaiser
Permanente has numerous programs, both in primary and specialty departments, whereby physicians train more than 600 residents each year. More

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than 10% of Kaiser physicians hold academic appointments and volunteer on
medical school faculties.
In addition to Dr. Garfield’s strong beliefs in clinical medicine, research,
and teaching, he (along with Mr. Kaiser) was committed to making Kaiser
Permanente’s faculty and facilities non-discriminatory, in an era when many
hospitals in the U.S. were segregated. This legacy continues with Kaiser’s
commitment to the provision of culturally competent care. Dr. Garfield was
also an innovator in hospital design. Today, Kaiser Permanente’s commitment
to environmental stewardship is seen in the green building design of its newest
hospitals. Several have been recognized as national models, with reduced use
of potentially toxic materials and maximal energy conservation.
Kaiser Permanente stresses a comprehensive view of quality. Regardless
of specialty, physicians are accountable both for achieving the highest-quality
clinical outcomes and for helping Kaiser remain the leader in prevention. The
combination of integration, prepayment, advanced information technology,
and an incentive system which rewards prevention and the avoidance of complications contributes to Kaiser Permanente’ success.
Although all physicians in TPMG are part of a single medical group, the
operational structure is based on the medical center, which includes a hospital
and the medical offices required to provide patient care for that particular
geographical area. The medical center is the locus of much of the integration
as primary care coordinates its efforts with specialty care, and patients move
easily between the outpatient and inpatient settings. The recruitment and
hiring of physicians is facilitated through a centralized regional department,
but the individual physician is hired by the local chief of a specialty to practice
in a particular department in a specific medical center. Today, there are eight
applicants for each opening in TPMG.
At present, physician satisfaction in Kaiser Permanente is extremely high
and, counter to the general trend in American medicine, has increased over
the past decade. The reasons vary from higher, stable salaries to the enjoyment
of working with excellent colleagues, the absence of a need to market one’s
practice, and the freedom to determine the best care for each patient without
the need for prior authorization. Each medical center has a physician-in-chief,
who has full accountability for the medical care provided in his or her medical center. Reporting to the physician-in-chief are the assistant physiciansin-chief and the department chiefs. This is similar to a university structure,
with a dean having associate deans and department chiefs reporting to him or
her. For many physicians, this structure provides the opportunity to embrace
a series of different responsibilities across one’s career, including helping to

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oversee quality or service for the department, becoming the chief of the department itself, taking on a role as assistant physician-in-chief, or becoming the
physician-in-chief. The broad variety of practice opportunities attracts a large
number of physicians with leadership potential. As part of this process, TPMG
has a regional Department of Physician Education and Development, which
coordinates not only the clinical educational programs, but more extensive
leadership development programs too.
As a large multi-specialty medical group, TPMG brings together department chiefs from different locations to share innovative practices. It also supports clinical experts in educating all physicians about the most up-to-date
medical approaches. The TPMG Board of Directors has committed funds for
educational programs while passing the nation’s most stringent conflict-ofinterest policy. As part of TPMG’s commitment to clinical excellence, each
physician is provided with paid educational leave and educational dollars,
which can be used for any continuing medical education (CME)-accredited
program.
Similar to many academic medical centers, the salary structure is annual
in design and the benefits are structured around a lifelong career. Salaries
are specialty-specific and market-competitive, and vary by performance and
tenure. As part of that process, each individual is evaluated yearly based on
quality outcomes, peer review, and patient satisfaction. Included in this evaluation is feedback from colleagues in the same department as well as from
physicians in associated specialties. In addition, there are incentives provided
for superior quality, access, and service.
These quality outcomes are facilitated by the availability of 21st-century
technology. During office visits, all patients are provided with information
on their personal preventive screening, including the recommended tests
based on age, sex, and clinical conditions, and whether each of them is up
to date. This allows every physician to contribute to the prevention of disease. Moreover, the common electronic medical record (EMR) includes each
patient’s radiology, laboratory, and pharmacy information, so that lost films are
no longer a problem; and potential complications can be avoided by comprehensive knowledge of the medications being taken, the presence of a bleeding
diathesis, and any important associated medical conditions.
Kaiser Permanente’s physicians and their patients use the Internet
extensively. Patients can access parts of their medical record and can
communicate using Health Insurance Portability and Accountability Act
(HIPAA)-compliant, secure messaging with their treating physicians. A huge
library of medical information is available, and hundreds of clinical leaders in

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Kaiser Permanente are currently creating online tools to allow better management of different conditions.
Of the physicians who are hired and successfully complete the first years
of intense evaluation on the path to partnership in the group, over 95% spend
their entire career with Kaiser Permanente. For this reason, in addition to
competitive salaries, the benefit structure is designed to allow each physician
to maintain a comparable income and lifestyle after finishing clinical practice.
Overall, the design of Kaiser Permanente is different from that of a solo
or small-group specialty practice, as reflected by Kaiser Permanente’s organizing principles: a multi-specialty group practice; a focus on research, teaching,
and technology; a commitment to prepaid insurance with prepayment to the
medical group; and the alignment of incentives both within and among the
entities. Although people may join for a job, most physicians discover both a
career and a mission. Kaiser Permanente offers a myriad of opportunities, both
clinically and administratively. It rewards people not only for their individual
contributions, but also for helping their colleagues. It focuses on the entire
patient, trying to prevent as well as treat disease, and searches for opportunities at every encounter to maximize the patient’s health. It is not for everyone,
but at a time when physicians are increasingly frustrated by the restrictions of
fee-for-service medicine, it is a great choice and a superb career. I personally
am grateful that I was available after my residency to help for a few months. I
am certain any other choice would not have provided the incredible personal
and professional satisfaction I have experienced.

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Group Practice in Plastic Surgery
Debra J. Johnson, MD, FACS

P

lastic surgeons tend to be an eccentric lot. We are known for being artistic,
creative, eclectic in our interests, and free-spirited. Perhaps because of our
peculiarities, most of us are solo practitioners. Practicing solo allows us to make
all the decisions, following our own personal muse.
But solo practice has its drawbacks. A solo plastic surgeon must indeed
make all the decisions, even those he or she is not particularly fond of or
does not have the expertise to do so. A solo plastic surgeon must also be
responsible to patients, staff, and vendors alike. A solo plastic surgeon takes a
lot of evening and weekend call, which may make it hard to get away for an
evening, a vacation, or an educational meeting.
A plastic surgery group practice offers significant benefits. Responsibility is
spread out among the partners. After-hours call is divided equitably. One does
not have to worry about one’s patients while on vacation. There is also the
camaraderie of interacting with surgeon colleagues and the ability to bounce
ideas or ask for an instant second opinion from a partner. It is like being in an
academic practice without the politics or committee work obligations.
Joining a group practice means that there is very little in the way of startup costs involved. An established group will have an office, staff, letterhead
and business cards, a marketing plan, insurance contracts, etc. Everything
is already up and running. The group may also have an accredited operating
facility. A new associate can show up on day one to an office already humming.
The staff should have already lined up consults to see. A new associate hits
the ground running.
How do you decide if a group practice is right for you? You have to evaluate
your own needs. What is your need for individual control versus your ability
to be flexible with others? What is your need for personal time off, and are
you comfortable covering for your partner’s patients when he or she is out of
town? Do you need to have decisions made quickly or are you tolerant of the
sometimes glacial process of achieving consensus among partners?

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Finding a Group Practice
Job searching today involves a multi-pronged approach. Plastic surgeons can
utilize the “Job Opportunities” section of the American Society of Plastic
Surgeons (ASPS) website. Job seekers can post an advertisement on the site.
Group practices can also post advertisements seeking a new associate. The
ASPS Plastic Surgery News has a classified advertisement section with job listings. A professor or colleague may have connections that can turn into job
opportunities. Sometimes a group, although not actively seeking a new associate, may respond favorably to a trusted colleague who refers them someone
looking for a job.
Headhunter organizations can market a plastic surgeon nationwide.
Headhunters send out short biographies of job seekers over a wide network.
In this way, a plastic surgeon may receive some interest from practices that
they might otherwise be unaware of. The downside of the headhunters is
the sometimes exorbitant fees charged to make those connections, as well
as the hefty price a prospective employer must pay should a referred associate
be hired. Before contracting with a headhunter organization, make sure you
have exhausted all the other less expensive ways of finding a job. Also, be sure
to read the fine print of the contract to understand exactly what fees will need
to be paid (whether or not you get hired).
In my own group, we have hired graduates of local residency programs who
are known to us, young surgeons referred by colleagues at distant institutions,
job seekers off the ASPS website, and we once hired a surgeon referred by
a headhunter. We had to pay a US$18,000 fee, which was annoying. This
surgeon at the time was a fellow at a large plastic surgery group practice that
we know well, so it is likely we would have been able to find out about her
without the headhunter! If you are competing for a job, you can understand
why a group might pick the candidate who does not come with an expensive
finder’s fee.
In evaluating a group practice, a surgeon should visit the practice and all
of its satellite offices, meeting each of the partners for individual interviews.
The surgeon should talk with as many of the staff members as possible and
also look at the practice’s website and marketing materials. The State Medical
Board website may provide information regarding any legal issues that affect
the practice. If any other physicians are known in the community, they can be
questioned regarding the reputation of the plastic surgery group. An inquiry
to the local hospital’s chief of plastic surgery (or chief of surgery) can be
helpful.

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A group practice may have a variety of personalities. As in a marriage,
you go into a group knowing that none of these personalities will change
just because you have joined them. A new associate needs to feel comfortable
with the dynamics of the group. You cannot join a practice and expect to find
new “best friends forever”, but you should expect trust, professionalism, and
collegiality.
It helps if each member of the group has a relatively similar practice mix.
If you are a dedicated hand surgeon, microsurgeon, or gender-reassignment
surgeon, and nobody else in your group does that, you may be stuck taking
call and caring for your patients 24/7. The beauty of a group practice is that
if one of your patients develops a problem on your weekend off, your on-call
partner will take care of it quickly and professionally. Of course, you will do
the same for them.
Newer associates tend to take care of more emergency room cases and
reconstructive surgery patients than their seasoned colleagues in the group.
The natural progression of a plastic surgery practice is one in which cosmetic
patients are most often referred by another patient (although the Internet is
becoming an important referral source). Usually, it takes some time to build a
cosmetic practice. A new surgeon also needs a variety of surgical experiences to
qualify and sit for the American Board of Plastic Surgery (ABPS) examinations.
Older partners may have evolved a more exclusive cosmetic practice, but they
certainly know how to deal with a post-breast reduction hematoma. However,
they may not be able to handle a thrombosis in a DIEP flap. As a new associate,
you need to be aware of the partners’ experience, limitations, and comfort
level with reconstructive issues. Also, be sure that the partners have hospital
privileges to care for your in-house patients when you are not available.

Contracts
An associate joining a group practice should have an employment contract.
This contract should delineate salary, possible bonuses, on-call obligations,
vacation time, educational leave, and other benefits. The contract should stipulate who pays the new associate’s fees for obtaining hospital privileges, medical malpractice premiums, educational meeting fees and travel expenses, and
the fees associated with taking ABPS written and oral examinations.
The terms of the employment contract should be specified. The contract might state that one to three years of employment as an associate
will be followed by a partnership buy-in if all parties agree. However, the

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employment contract should be revised annually to adjust for market conditions and changing benefits. The contract should have a cancellation clause
that is agreeable to both parties. A boilerplate employment contract is shown in
Appendix A.

Dividing Expenses
Each group will determine how practice expenses are divided among the partners. Any fees received are usually the property of the billing partner. Although
some groups divide fees received in a more egalitarian fashion, they are not
the norm. Practice expenses are often divided based on productivity. Thus, a
high-earning partner pays more for the practice’s overhead on the assumption
that he or she is using more practice resources. In my own office, we have an
expense formula based on fixed and variable costs.
Fixed costs include office rent, utilities, computer expenses, marketing
costs, etc., since we feel that each of us uses these resources fairly equally.
Variable expenses include items such as personnel costs and medical supplies,
since the physician with the larger patient base uses these more. These variable expenses are determined based on the productivity of each partner on
a monthly basis. These expenses are adjusted quarterly and then again at
year’s end, to accommodate for the short-term variability in productivity due
to vacation time, sick leave, meeting attendance, etc. In the past, my office
determined variable expenses based on fees received. However, we decided
that many of the reconstructive cases were not being reimbursed to the level
of their resource use. We have since changed to a system that utilizes relative
value units (RVUs). Each month the number of RVUs billed is divided by the
variable cost basis, and a cost per RVU is determined. Each physician partner
is then expensed based upon the number of RVUs billed that month. Again,
the number is corrected quarterly and at year’s end.
Some costs are direct expenses to each partner. These include the costs
of breast implants used and/or fillers injected, malpractice premiums, license
fees, membership fees, educational expenses, etc. The costs associated with
the support of a new associate (salary and benefits over and above the fees
received by the new associate) are divided equally and expensed to each partner
monthly.
When a new associate becomes more established, he or she may bring in
more income on a monthly basis than his/her salary and benefits require. This
excess is divided among the partners and added to their monthly income.

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In our office, we subject a new associate to the same accounting that each
partner has undergone. Initially, the new associate will run income-negative
for several months. Once the new associate begins receiving fees, that income
is tracked to determine when he or she climbs into the black and the group
has recouped the start-up costs of the new associate. Once a new associate
becomes profitable, the group must determine how much profit it would like
to recoup prior to making an offer of partnership.
For example, if an associate is receiving an annual salary of US$200,000
with 18-percent benefits, he or she needs to bring in professional fees not
only to cover his/her own salary and expenses, but also to make the practice
partners a modicum of profit. This profit is in compensation for the group
providing a turnkey start for the new associate. This profit usually runs
US$10,000–US$20,000 per partner. Once the partnership has received that
profit, and if all parties agree, the new associate may be asked to join the group
as a partner.

Buying In to a Group Practice
If a plastic surgeon associate becomes a productive member of the group
practice, the offering of a partnership opportunity is appropriate. The decision
on when to offer partnership depends on various factors. The group would
want the new associate to be in the black, and productive enough to cover
his or her own salary and benefits. The group may require completion of
board certification. The associate will have to fit in well with the group and
be considered a team player. Although the majority rules in group decisionmaking, it is important that there not be strong dissent by any one member
of the group about adding a new partner.
A group practice has assets. These assets are tangible items like office equipment and exam room chairs, surgical instruments and lasers, etc. Assets are
depreciated over time and new assets are acquired. At any given time, the
group’s accountant can value these assets. Each partner owns a share of these
assets. When a new partner buys into the practice, he or she must purchase
a share of these assets. The group determines the cost of the buy-in with the
assistance of its accountant. Some practices may have a buy-in that represents
only a share of these tangible assets. The new associate would pay that buy-in
cost to the partners (who would divide it amongst themselves), and a partnership agreement would then be entered into. A boilerplate partnership buy-in
agreement is shown in Appendix B.

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Some practices include a premium to the buy-in for the intangible asset
of goodwill, or the advantage that comes with joining an established and
well-respected group. There may be some validity to this premium, depending
on the reputation of your new partners and the trickle-down effect a new
partner gets from joining a good group. The added cost of this premium to
the buy-in would likely be negotiated with the group.
The buy-in is also a formula for the buy-out. When a partner retires or
leaves the group for other reasons, the share of the tangible assets held by
that partner will be sold back to the group. A current value will need to be
determined based upon the group’s agreed-to formulation.

Owning or Renting Office Space
While renting office space is less expensive in the short term, owning your
own building offers tremendous advantages for a group practice. In a group,
the building mortgage can be held by the practice, so the liability is shared
and the cost is divided equally. Therefore, it is much less expensive per partner
than it would be for a solo plastic surgeon. The corporation holds the paper
on the building and pays the mortgage. Each partner is a member of the
corporation and owns a proportional share. As the mortgage is paid off, the
equity in the building increases. The partners can pay rent to the corporation
for the use of the building. That rental income is then used to pay for upkeep
and renovations of the building. In our practice, rent is handled by having a
second corporation owning the building, which is separate from the medical
group corporation. Income over and above what is needed for maintenance
of the building can then be paid back to the partners as passive income, which
is not immediately taxable.
The rent you charge yourself must be in keeping with the usual and customary rents in your area. In our own case, we each pay US$6000 per month
in rent, which is a pre-tax business expense. Twice yearly, we determine the
amount of funds held by the building corporation that is in excess of what
is needed to maintain the building. We then divide that excess among the
partners, and we each receive a check. That income is reported on a K-1
form that we submit to the Internal Revenue Service (IRS) with our tax
forms. The tax on that income comes due only when a partner sells his/her
share of the building. This past year, I received over US$40,000 back in this
passive income. We do occasionally refinance to get a better interest rate.
We have also refinanced, taking money out as the value of the building has

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risen, in order to keep the price per share relatively low so that a new partner’s buy-in to the building is not exorbitant. While we do not yet own
our building outright, it has been one of the best investments our group
has made.
When a new associate accepts the offer to become a partner, he or she
can also be offered the opportunity to buy a share of the building. The buyin should be based on a current appraisal minus any outstanding loans. The
buy-in can be made in one payment, or the group can finance it. Our group
allows a new partner to pay for his or her share in the equity of the building
over five years, with an interest rate on the outstanding balance of prime plus
2 percent. When a partner retires or leaves the practice for another reason,
his/her share of the building is repaid over five years, again with the same
interest rate. By financing both the buy-in and the buy-out, we avoid large
shifts in the building’s budget. A five-year buy-out also spreads the retiring
partner’s tax burden over a longer period of time.

Medical Malpractice Insurance
There may also be an advantage in a group practice regarding the cost of
malpractice insurance. Our group purchases insurance together and so, by
bundling our six doctors, we get a small discount on our premium. Having
each of the partners under the same insurer, should a liability issue arise, makes
the logistics of coordinating a response simpler as well.
Belonging to a group does make each partner somewhat responsible for
the behavior of the other partners. One partner’s stellar reputation can have a
positive trickle-down effect on the other partners. On the other hand, if one
partner becomes embroiled in litigation or bad publicity, that can negatively
impact on the group. Groups therefore may be less tolerant of a more poorly
performing surgeon, as they are unwilling to risk their own reputations on a
bad actor.
A group must also police itself regarding workplace harassment. If one
of the partners behaves badly with staff, it behooves the partners to correct
the situation immediately. Failure to mitigate, in the event of a second complaint about the same physician, can result in group liability. In many states,
such liability can be punishable by multi-million dollar settlements. Our office
undergoes yearly staff and physician training in the prevention of workplace
harassment. This is an ongoing effort not only to make our office a pleasant
place to work, but also to reduce our liability.

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How to Administrate a Group
How a group is managed administratively is a decision that each group must
decide on its own. Some groups have a single physician-manager (usually, the
founder or senior-most member of the group). This physician will oversee
the day-to-day management of the group and will make decisions on behalf
of the group. Some groups have a physician-manager who is fairly autocratic
(“It’s my group and I’ll run it the way I want to”), whereas some physicianmanagers only feel comfortable making smaller decisions and leave the big
decisions for the group as a whole to come to a consensus on.
Our group rotates the physician-manager on an annual basis. While there
is less continuity in style and perhaps philosophy, in this way each partner
gets an opportunity to know the nuts and bolts of running the partnership.
From signing the vendor checks to helping our administrator make decisions
regarding employee issues, it allows each of us (at least every six years) to
know the business aspects of running our practice. We meet monthly for a
corporation meeting, in which we discuss together any issues that have arisen,
view our financial statements for the prior month, and make plans for the
future. Having six partners is sometimes like herding cats, since we all think
that we are pretty smart people and we each know exactly which way the group
should go (even though we do not always agree). Sometimes the process of
consensus can be a bit arduous, but it does mean that we do not make any
decisions frivolously.
We also periodically have a strategic planning retreat. We get together on
a Saturday for a few hours and discuss the business, the overall economy, our
personal plans for the future, and how best to position the partnership. We
may make plans for adjusting staffing, setting goals for improving patient satisfaction, or planning renovations to our physical plant. One year, our strategic
plan involved developing a revenue stream that was not dependent on the
physicians. We remodeled part of our building and built out a separate skin
care and laser center. Although it took us a while to find the right registered
nurse to supervise the center (thus, it was a loss leader early on), it has now
become quite profitable to the practice.
Strategic planning can help the practice in knowing when senior partners
plan to phase out, when to add new associates, and when to adjust staffing.
All of this helps to perpetuate the group, despite changing conditions and
personnel. Our group has been in existence for almost 40 years and has had a
total of 14 surgeons in the practice. While we currently have six surgeons, we
have had a high of eight and a low of three. Five to six surgeons seems to be

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ideal for us in terms of sharing our office and operating room (OR) space, as
well as sharing call and overhead expense. With eight, it tended to be difficult
for some partners to get enough OR time and the post-operative care was a bit
overwhelming for our staff. With fewer partners, the hard choices regarding
cutting staff have to be made and the overhead expense per partner eats up a
larger percentage of each physician’s income.
Because we are a large group, we have an administrator. This person handles the day-to-day operations of our group, organizes the staff, develops and
monitors the budget, and oversees our marketing plan. We hire outside consultants for specific needs, such as website development, information technology
issues, and specific marketing projects. While a good administrator can command a high salary based on experience and education, as a group the cost of
our administrator is divided equally and is therefore a very reasonable expense
for an individual partner.
The administrator must have the power to oversee the staff. Hiring and firing should be the administrator’s purview (with the advice and consent of the
partners). Individual partners must not get bogged down in the minutiae of
personnel issues, as it will only undermine the authority of the administrator.
When an employee speaks to a partner regarding an office issue, it is important for the partner to avoid taking sides or making promises. Sometimes an
employee may seem to be a great asset to one partner, but really is toxic to the
office environment. The partners must look to the overall health of the office,
and defer personnel decisions to the administrator and the physician-manager.
Our administrator also participates in a nationwide consortium of large
plastic surgery medical group managers. This group meets annually in person,
and frequently by phone/email. In this way, the issues that affect the group
practice of plastic surgery can be discussed and solutions brainstormed. Our
administrator benefits from the experience of others, and that helps our group
to run more effectively.

Conclusion
While the group practice of plastic surgery is not for everyone, it does offer
distinct advantages. Unlike the solo practitioner, there is shared responsibility
and shared expenses. A group offers collegiality with the ability to discuss
patient problems and possible solutions. By pooling resources, the practice
can have a significant variety of equipment and personnel available. A group
can provide more constant coverage and a wider variety of skills, and so is

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often more appealing to health plans than an individual provider. What you
give up in personal autonomy is repaid in the freedom that comes from having
nights, weekends, and vacations free from worry about your patients’ ongoing
care. For those plastic surgeons who cherish their time off and who like being
around other plastic surgeons to share ideas with and to solicit advice from,
joining a plastic surgery group practice should be strongly considered.

Appendix A: Employment Agreement
This Agreement is made on this day, ____________, by and between
________, a professional corporation, hereinafter referred to as “Employer”,
and _____________, MD, hereinafter referred to as “Employee”.
Term: Unless terminated sooner as provided herein, the term of this
Agreement shall be from ___________ to __________. At this point in time,
it is contemplated that the entire term of this Employment Contract will
be year to year for a period of ____ years. The Employment Agreement for
the subsequent years will be presented to Employee prior to the termination date of each prior agreement subject to the considerations described
below.
Compensation: Employer shall pay to Employee during the initial term of
this Agreement a base salary of ___________ dollars per year. This salary
shall be subject to State and Federal tax withholding as required by law. In
addition, Employee shall receive a bonus equal to ___ % of net production
over and above ________ dollars per quarter. Employer shall pay the bonus
amount quarterly on the second pay period following each quarter of the
initial term.
Compensation for subsequent years will be determined after considering
the level of production achieved by Employee for the prior year, the willingness to build a practice, and the compatibility to function within the group
practice. This contract is for one year only.
Service: Employee agrees to devote his/her entire time and attention to the
practice of Employer and not to engage in any other business or occupation.
Employee may be asked to participate in and perform certain duties pertaining to the business of Employer. Employee also agrees to share in one-fourth
(1/4) of Employer’s on-call time. Employee is expected to provide his/her
own automobile.
(Continued)

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(Continued)
Vacation: Employee shall be entitled to ____ weeks of paid vacation during
the year of this contract. Employer’s office is closed for eight holidays during
each year.
Disability: In the event Employee is mentally/physically disabled, the Unemployment Insurance Code of the State of ________ shall govern disability
payments. In the event Employee is disabled for a period of longer than
_____, Employee shall be determined to have terminated employment with
Employer.
Continuing Medical Education: During the calendar year, Employee is entitled to ____ workdays to attend meetings that shall be agreed upon in
advance by Employer. Employer shall reimburse Employee for essential
expenses incurred up to _______ dollars per year.
Employer shall pay necessary dues, membership fees, and other similar
expenses in local, state, and national medical societies and associations as
shall be agreed upon between Employer and Employee.
Insurance: Employers shall be responsible for malpractice premium payment
on behalf of Employee. If Employee’s contract is terminated, Employee shall
acquire and maintain tail malpractice coverage for any errors and omissions
that might have occurred prior to termination of employment.
Employer shall be responsible for life insurance premium payments for
Employee for a defined benefit of ______________ dollars.
Major health and medical insurance shall be available to Employee (and
family) as provided for all eligible employees of Employer.
Profit-Sharing Plan: Employee is eligible to participate in the qualified profitsharing plan of Employer after one year of service as defined by the Employee
Retirement Income Security Act of 1974 (ERISA).
Termination of Contract: Either party upon 60 days’ written notice may
terminate this Agreement. This Agreement may be terminated immediately
by Employer if Employee engages in any personal misconduct or substance
abuse, is found guilty of a felony, or is disciplined by any professional organization. In the event of termination, Employer shall retain all medical histories, files, and records. At patient request, medical information shall be made
available for copying by and at the expense of the withdrawing Employee.
Shareholder-Employee: Once Employee becomes certified by the American
Board of Plastic Surgery and is producing income in excess of Employee’s
salary and benefits, consideration will be given to Employee becoming a
(Continued)

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(Continued)
shareholder with an interest equal to that of the other physicians employed
by Employer who are shareholders. All parties to this Agreement will work in
good faith to cause this shareholder/partner agreement to occur. However,
nothing contained in this Agreement shall be construed as a guarantee of
shareholder/partner status.

Appendix B: Buy-In Agreement
This Agreement, made on ______, is executed by and between ______, a
professional corporation (herein “Corporation”), and _________, MD.
The Corporation and _________, MD have agreed that in exchange for the
consideration described herein, ________, MD shall become a shareholder in
the Corporation. There are currently ___ shareholders in the Corporation.
Each of the shareholders is in agreement with this buy-in as evidenced by
the signatures below.
The shareholders entered into a stock redemption agreement on ______.
_______, MD and his/her spouse evidence their Agreement to be bound to
the terms of such stock purchase agreement by their execution of the copies
of the agreement attached hereto.
The agreed-upon buy-in for _______, MD’s interest in the Corporation is
$________. A promissory note attached hereto shall be executed to evidence
________, MD’s indebtedness with respect to this buy-in.
Following this Agreement, a new employment contract in the form attached
hereto shall be entered into between _______, MD and the Corporation.
Any claim or controversy arising out of any provision of this Agreement
shall be settled by arbitration in accordance with the rules of the American
Arbitration Association and consistent with the laws of the State of _________.
________, MD’s position as a plastic surgeon within the specialized practice
of the Corporation offers the opportunity to learn the particularly unique
specialized and sophisticated services previously developed by the other
shareholders in the Corporation. In addition, certain specific, unique, and
proprietary-type procedures may be disclosed to ________, MD as a result
of his/her involvement with the Corporation. For the foregoing reasons,
________, MD agrees that in the event employment is terminated with the
Corporation, whether voluntary or involuntary, ________, MD will refrain for
one year following the date of separation from utilizing those procedures as
a sole physician or as part of any position or medical group, within 50 miles
of the present corporate office location.

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Part II
Marketing and Monitoring

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Internal and External Marketing
and Public Relations
Anne Cohen, MBA

R

egardless of the age of your practice, marketing is essential to build and
grow a thriving plastic surgery business. In this chapter, readers will learn
the basics of marketing and how to apply them to a particular practice.
What is marketing? Some people think it is just advertising, but that is just
one aspect of marketing. Marketing is anything and everything that promotes
you to the public. Here are some activities that fall under marketing’s umbrella
(see Fig. 1):














Advertising
Behaviors of staff and physician
Branding
Collateral
Community participation
Cross-channel affiliations
Events
Internal marketing
Internet and viral marketing
Media coverage
Office condition and location
Public opinion
Referral programs

Market effectively enough, and you can become ubiquitous in your marketplace. People feel as though they see your name everywhere, but are unable
to pinpoint one primary point of awareness. So, how do you become ubiquitous? How can you be the name that people find on the tip of their tongues
when the term “plastic surgeon” comes up in conversation, as it did just yesterday somewhere in your city?
Some practices have advertised their way to consumer awareness with
billboards, bus benches, subway signage, and TV and radio commercials.
111

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Fig. 1.

Forms of marketing.

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Notwithstanding the enormous expense, the risk of becoming a commodity
is pretty real. What if, after all that advertising, you are no more visible than
a glass of water in a sea of saline? After all, not everyone is moved to action
by advertising in a society that is overwhelmed with constant marketing messages. Furthermore, if you do too much advertising, some people may wonder
why it is you have to do so much advertising!
At the opposite end of the spectrum, some plastic surgeons tell me that they
do not need to market the practice because “I’m building my practice strictly
by word of mouth” (often accompanied by a slight sniff). Well, what if your
patients are not chatty? What if, when pressed by envious, saggy-jowled friends
duly impressed by her facelift (“Wow, Mary, where’d ya get that fabulous
facelift?”), Mary just says, “Don’t be silly (accompanied by a slight sniff),
I ’d never have a facelift. It must be the vitamins.”? If you are terrific at what
you do, and you have the wherewithal to wait for word-of-mouth referrals to
bring in enough patients to cover your overhead, depending exclusively on
referral marketing is certainly an option. However, in an age when it seems that
almost anyone with a medical degree is shooting fillers and learning liposuction
in a weekend (creating more consumer confusion about quality and ability),
I would be afraid to bet the farm on it. Twenty years ago, maybe. Now? No.
So, how do you reliably get the word out about your practice in a
style which consistently but subtly delivers a message to our informationoverloaded world that you are one terrific plastic surgeon? By creating and
implementing an effective marketing plan that employs a broad variety of activities. Those activities should be geared toward your targeted demographic to
instill and reinforce positive impressions that you are the obvious choice for
plastic surgery services in your geographic area. Your geographic area may be
a 20-mile radius from your front door; it may be your county; or, if you have
a unique procedure, it may be the entire world. This brings us to our first rule
about marketing.

Rule #1: Effective Marketing Follows
a Marketing Plan to Avoid Waste
of Time and Money
A marketing plan is a written document that outlines the steps to be taken
in one or more of the activities just described. Include dates for completion;
name an “owner” for each item by assigning a person or a firm to perform each

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activity, such as placing advertisements or writing the monthly e-newsletter;
and attach a budget to each item. Insure adherence to the plan by benchmarking. By constantly tracking results, adjustments can be made to create better
results. Although the marketing plan is somewhat fluid, it is nonetheless written down and followed step by step.
I meet surgeons all the time who employ knee-jerk marketing. For example, if your competitor runs an advertisement, you run a bigger one. Your
competitor joins an Internet portal, so you join that same portal. If you have
no written marketing plan, you will consistently market in a reactive mode. By
failing to create a written marketing plan, you are also at the mercy of every
skilled sales representative who will try to reach you by phone, text, fax, email,
or personal visit to inform you of a product or service that may or may not
bring you any business. Unfortunately, low profitability of a product or service
is generally discovered long after you have parted with thousands of dollars.
If you have no marketing plan, you will fritter away time and money,
possibly to the extent that you throw up your hands and decide that marketing
is time-consuming, money-sucking, and futile. Oy, such a shonda for you to
come to this erroneous conclusion! Keep reading to see how you can avoid
this unfortunate end.

Rule #2: Marketing Must be Consistent
Marketing is like any discipline: moderate efforts executed on a consistent basis
are more effective in the long term than heroic efforts executed sporadically.
It is easy to understand that even a mere 20 minutes of daily exercise will
yield a higher benefit than a once-weekly 2-hour fitness marathon at the gym.
Similarly, a faucet that slowly drips water into a bucket will ultimately result
in a bucket full of water; but opening a fireman’s hose at full throttle forces
water outside that bucket, resulting in a waste of water and a bucket that may
not be filled. You want your marketing to be like the faucet: drip, drip, drip,
so that little time or money is wasted to fill the bucket. That bucket, of course,
is consumer consciousness.
The primary reason why sporadic marketing reaps little reward is that
consumers come in three basic types (who knew?):
1. One who is ready to buy now;
2. One who will be ready to buy later; and
3. Referral source or second buyer.

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a. A referral source is someone who either used your services before and
refers others to you, or someone who has been exposed to your marketing often enough to remember your name when the subject comes
up. Example: Mary’s mother has never been to your office, but she has
been exposed to your marketing over time. When Mary mentions that
she is interested in having a breast augmentation, Mary’s mother says,
“Hey, what about that surgeon on Main Street?”
b. A second buyer is a person who can affect the outcome of a transaction. The second buyer is often the one who controls the checkbook
or has the emotional ability to approve or deny the transaction for the
primary buyer, your prospective patient. This is usually the husband or
significant other whose opinion about Mary’s breast augmentation, for
example, will seal or nix the procedure for Mary (and for you!).
The existence of these three consumer types is why sporadic advertising is
not very effective. The exception is the ready-to-buy-now consumer who just
happens to notice your advertisement at the very time they are ready to take
action. The problem is that the ready-to-buy-now consumer is the smallest
consumer group at any point in time. Referral sources or second buyers are the
largest consumer group, and the will-be-ready-to-buy-later consumer lies in
the middle. This is why even solid, well-known brands like Kleenex continue
to advertise on a regular basis. They do want to attract the ready-to-buy-now
consumer, but they also want to remind the other two consumer types that,
when they need a tissue, Kleenex is the best brand for their needs.
Speaking of Kleenex, have you noticed that certain brands have the ability to take over an entire category? Nobody says, “Pass me a facial tissue”;
they say, “Pass me a Kleenex.” Kleenex has become so ubiquitous that they
own their category: facial tissues. Rollerblade and Xerox are other brands
you know well that also reflect category ownership. That category ownership shows the power of regular, drip-drip-drip marketing (no Kleenex pun
intended).

Rule #3: Each Marketing Plan is Unique
You, your personality, your experience, your staff, and your location are
unique. To be effective, your marketing plan must reflect those unique characteristics. Although a lot of people like chocolate, vanilla, or strawberry ice
cream individually, only a small percentage of consumers buy Neapolitan ice

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cream, which is a mix of all three. Likewise, consumers need to understand
what makes you special in order to effectively differentiate you from other
plastic surgery practices.

Rule #4: A Marketing Plan is Research-Based
You must answer these three questions before creating a marketing plan:
1. What do you have to offer?
a. What are your strengths, weaknesses, opportunities, and threats, both
on a personal and a practice level?
2. Who wants what you have to offer and how can you best reach them?
3. Who are the competitors offering similar services?
Let’s take each of these in turn to help you create your own unique marketing plan.

What do you have to offer?
At first, this may seem fairly obvious: you offer plastic surgery services. In
marketing, however, you will need to create a much more unique description
of your practice. That unique description is called your unique selling proposition, or USP. In order for your brand to be successful, it must differentiate
itself from other similar brands. In other words, you must distinguish yourself
from other plastic surgeons in your market.
There are several ways to create your USP. Perhaps you have had extensive
training in facelifting procedures or breast procedures, and you wish to focus
on one type of procedure. Your USP would then be that of the local facelift
expert or breast expert.
Another way to choose your USP is to ask yourself if there is a procedure
you would love to do 30 times a week to the exclusion of all others. If the
answer is yes, you have your USP. If the answer is no, and you enjoy performing
a broad variety of procedures, then your USP will not be procedure-based. You
can choose another focus, like pricing (either the low-cost or luxury leader),
more extensive office hours, the most years in practice, the friendliest staff, or
the most advanced medical aesthetic center. There are many ways to differentiate your practice from others in your area. The point is, you need to differentiate yourself. Consumers react best to a brand when they understand specifically

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what differentiates that brand from other brands in the same market. In our
information-saturated world, differentiation is key.
The use of SWOT analysis can help you know yourself and your practice
better in order to create your USP. The better you understand both your
personal and your business characteristics, the more rapidly you can create your
USP, and the faster you can identify and eliminate any barriers to conversion
when consumers come to the office.
The acronym SWOT stands for Strengths, Weaknesses, Opportunities, and
Threats. The first two are internal and within your control, and the last two
are external and beyond your direct control.
For example, perhaps you are a terrific surgeon, but you are a bit shy. You
find it difficult to communicate during a consultation when you come across as
nervous and awkward. That is an obvious weakness, which can be mollified by
finding an opportunity for improvement. You could join Toastmasters or work
with an image consultant to boost your communications skills. On the other
hand, being in practice for 20 years is a strength that can be used to your
advantage. I am sure you will think of many characteristics about yourself.
Using Table 1, identify your personal strengths, weaknesses, opportunities,
and threats. Extra boxes are inserted for you to add more.
Keep in mind that there are external opportunities and threats over which
you may have little control. For example, if you do not speak Spanish, and
Table 1.

Personal SWOT analysis.

Item
Interpersonal skills
Personal appearance
Training, education, and certification
Recognition (awards, media appearances)
Length of time in practice
Public reputation
Language skills (second language, signing
for the deaf, etc.)
Management skills
Organizational abilities
Personal challenges
Family challenges
Personal financial situation

Strength, weakness,
opportunity, or threat?

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Spanish speakers are a part of your target market, a personal opportunity
may be the availability of Spanish courses. A personal threat may be the
responsibility for an elderly parent who requires your care, a disorder or disease
affecting you or a family member, or the demands of being a single parent.
These and similar problems may make it more difficult for you to compete
in business because you must spend time away from work to handle other
responsibilities. This is not to malign your personal situation, but you should
be aware of its effect on your business.
Now let’s take some time to identify the SWOT of the practice itself (see
Table 2).
Armed with the information created from your SWOT analysis, what is
special about you and your practice? What can you take from this analysis
to create your USP? What impediments need to be addressed to ensure success before you begin marketing? Even the most effective marketing will not
overcome the actions of ill-trained or rude staff.
Table 2.

Practice SWOT: analysis.

Item
Location
Office appearance
Office hours
Equipment
Staff (training, experience, friendliness, attention
to detail, length of time with you, etc.)
Economy
Malpractice insurance (do you have it?)
Cash flow
Practice debt
Competitors
Changes in social patterns (is the neighborhood
up and coming, aging, etc.?)
Patient management system (do you have one
that works well?)
Referral system
Patient retention
Practice reputation
Consumer trends

Strength, weakness,
opportunity, or threat?

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Who wants what you have to offer and how can
you best reach them?
As you undoubtedly know, most elective plastic surgery procedures apply to
a broad demographic group: any healthy person who would benefit from a
cosmetic procedure, is an appropriate candidate, and has the means to have
a facelift, liposuction, or tummy tuck. While the cosmetic surgery market is
vast, certain subsets of demographic groups are more likely to want particular
procedures. For example, although many 55-year-old women may desire a
facelift, fewer of them desire a breast augmentation. The reverse is true of
20–35-year-old women.
Before creating your final USP, think about these options:
1. Base your USP on the largest demographic in your market;
2. Base your USP on the procedure(s) you wish to focus upon; or
3. Base your USP on a unique, otherwise-underserved subset group.

USP based on largest demographic
Let’s say your office is located in an area in which the largest demographic
group is that of retirees. This demographic group is more likely to want laser
skin treatments and facelifts than breast augmentations or pectoral implants.
Therefore, focusing your practice on the former types of treatments and procedures will attract the largest potential pool of consumers. However, if you
are thinking about a USP as the local breast expert, you will either have to
ferret out the relatively few consumers of the right average age for this procedure, consider relocating to an area with a younger demographic group, or
change your USP to match procedures desired by retirees.
Demographic identity can also be based on education, gender, income,
race, sexual orientation, and other characteristics (such as family size and home
ownership).

USP based on procedure
A certain facial plastic surgeon I know has an extremely successful practice
based exclusively on deep plane facelifts, with their accompanying high price
tag. Although she is in a fairly small community, she is reasonably close to
New York City by train. Her USP is that of a deep plane facelift expert, with a
target demographic group of the wealthiest individuals within 200 miles. Of
course, she has patients who come to her via referral from all over the U.S. and

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beyond. Although she loses the local market’s blepharoplasties, rhinoplasties,
and lip augmentation business, she makes up for it with fewer, higher-priced
procedures.
There are successful niche practices that target very specific demographic
groups with great success. Be aware, however, that if you choose to be the
facelift expert, for example, you may need to enlarge your geographic radius
beyond the typical marketing reach of 20 miles, depending upon your local
population’s age, income, and perception of plastic surgery.

USP based on a unique, otherwise-underserved subset group
Obviously, the more limited the demographic choice, the smaller the size of
the group to whom you can market. For example, another client of ours has
an almost-entirely gay staff, although he is not gay (not that it matters; it is
merely a point of information that you, yourself, do not need to be part of the
demographic). Notwithstanding this, he performs an average of 20 procedures
a week on patients who are almost all gay. The benefit is a near-constant referral
source.
The challenge of niche marketing, however, is that a narrow demographic
is limiting in any geographic area. If that demographic group discovers a new
preferred plastic surgeon or if a bad economy negatively impacts that niche
group, one’s practice survival can be at risk. As an example, during the height
of the 2008 market crash, our deep plane facelift expert had no small procedures to shore things up. She only performed rhinoplasties, blepharoplasties,
and laser treatments in conjunction with a facelift. By not performing those
procedures as stand-alone services, and also by not offering dermal fillers or
aesthetician-type services, the narrow focus of her practice put her at risk when
the economy tanked.
Most practices target the most obvious pair of demographic factors: gender
and income. Specifically, they target wealthy women who can afford aesthetic
surgery. The next most targeted group is usually non-wealthy women who
can qualify for financing. This tactic, however, pits you against everybody else
who is marketing to those same groups, including non-plastic surgeons, and
that means your marketing is harder to be noticed.
Whether you decide to market to the masses or to a selected subgroup,
you will need detailed information about your demographic group.
How does your demographic group primarily receive information: on the
Internet, on the radio, on TV, or in the local paper? Once you have uncovered
the primary information source, you need to identify the specific Internet sites,
radio stations, TV stations, and newspapers. Where does your demographic

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group go for recreation: to the nightclub, to the gym, to the opera house, or
to the mall? How can you effectively market through those venues? Whose
opinions does your demographic group trust, and how can you obtain those
resources’ recommendations for your practice? Example: if the most popular
hair salon for your demographic can be identified, can you create a referral
relationship (also called a “cross-channel”) with that salon by creating events
or cross-promotions with the salon?
Using another example, we have a client in Connecticut. Our research
revealed that most women in his very wealthy part of Connecticut choose a
plastic surgeon based on personal referral. In order to create a patient base
for this client’s new practice, we had to find women with respected opinions
who were “hooked in” to other women, and then woo them to this surgeon
through a variety of marketing tactics. We went so far as to engage a wellknown gadabout to quietly work for us and bring her friends to our client’s
events. Sometimes, one has to go to great lengths to reach the demographic
group on their terms.
Kernelling down to the fine details about your demographic group will
enable you to increase your patient base exponentially with less effort than
a scattershot approach. You will know where to advertise, whether seminars
are effective, where to hold them, what topics will bring the most attendees,
which charitable organizations to work with, etc.
How do you find specific demographic information? Check your local
census data and talk with the local chamber of commerce. Both are a wealth
of information.

Who are the competitors offering similar services?
You are missing the boat if you are not aware of your competition. To be
honest, I hate to use the word “competition” in the context of medical professionals because, after all, physicians are expected to respect other physicians in a way not expected of ordinary retailers. Because you belong to the
same trade organizations and boards, you may view other plastic surgeons
in your area as colleagues, and rightly so. Nonetheless, every consumer who
becomes a colleague’s patient is a consumer who did not become your patient.
Unfortunately, that creates a level of competition.
Knowing your competition enables you to offer your services within a
context. Be aware of your competition in terms of pricing, hours, staff, and
product and service offerings. Know what is happening with local pricing so
you can decide how to use that information to your benefit. You need not
price-match, but do not think for a moment that Kleenex does not know the

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price of Puffs in every single market in the U.S. — it does. Understanding
local pricing enables you to decide whether to price your services and products
lower, higher, or in the same range as others in your area.
Know what competitors are offering so that you can offer something different. If everybody offers Brand X, offer an alternative that sets you apart. This
contributes to your USP. Or, offer Brand X with a twist — when the complete
set is purchased, include a facial, a microdermabrasion, or a computerized
skin analysis. Kleenex does not just compete by price; it uses product variety to compete with Puffs. Kleenex created Lotion tissues, Anti-Viral tissues,
Ultra Soft tissues, Extra Large tissues, menthol-infused tissues, tissues made
with recycled paper, holiday-themed tissues, not to mention their Everyday
tissues. Likewise, unique offerings that are yours alone will set you apart from
other plastic surgeons in your market.

The Importance of Marketing Bridges
To create a marketing plan that will grow your business, you will need to
address any marketing bridge issues that may be impediments to success.
Unaddressed Marketing bridges will turn patients away before you even have
a chance to meet them! There is no point in spending time and money to
attract prospective patients if you cannot convert them.

What are Marketing bridges?
Everything that affects a consumer’s ability to create a transaction with you is
a marketing bridge. Marketing bridges can be internal or external; and they
can be “owned” by you, your practice, or even by your prospective patients.

Internal Marketing bridges
Look at your SWOT analyses. What are the items you identified as weaknesses?
These are internal marketing bridge issues which must be remedied if at all
possible.
There may be internal marketing bridge problems you are not even aware
of. Perhaps your front desk staff is inexperienced. After hearing a few Secret
Shopper recordings, you discover they do not know how to convert a caller
into a consultation. Training them can solve that marketing bridge issue before
you spend money geared to drive prospects to call in, only to experience a
problem with the receptionist(s).

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In a similar vein, if your website is unattractive or information is difficult
to find, take steps to fix it before investing time and money in marketing the
practice. If you do not know how consumers are reacting to your website,
check your website statistics for clues. If a large percentage of consumers who
come to your website leave in 30 seconds or less, your site may not be offering
a good experience. Your website must be a marketing tool; if it is not, you
have a marketing bridge problem.
Prospective patients may experience marketing bridge issues in your office
that you do not even notice, like the stain on the carpeting or the lack of a
pleasant greeting. Although a single small incident is seldom enough to turn
off a prospective patient, several of them together may be killing conversions
long before you even meet prospective patients!

External Marketing bridges
Look at your SWOT analyses again. Items identified as threats are external
Marketing bridges. For example, scarce parking near your office will irritate
prospective patients who did not anticipate the pre-planning required to find
a parking place. Consequently, they are more likely to arrive late and be upset.
Rather than forcing patients to spend an hour trying to find parking, create
an arrangement with a parking garage and turn the problem into the benefit
of free parking for your patients. It will be well worth the money to eliminate
this barrier to conversion.

Patient-owned Marketing bridges
Have you ever done a consultation that went extremely well but the patient
never scheduled and you have no idea why not? Are your conversion ratios
below 50%? Low conversion ratios in an otherwise normal economic environment may be due to poor conversion technique or to a consultation process
that fails to earn the prospective patient’s trust. Conversely, you may be seeing
prospects who have undisclosed marketing bridge issues and those prospects
are unlikely to convert regardless of what you do.
Patients have three primary marketing bridge issues, all of which are outside your direct control:
1. Motivation/Desire;
2. Timing; and
3. Ability.

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Patients must cross all three Marketing bridges in place in order to convert
from a prospect to a patient. If a patient has a high desire for a procedure and
the time to take off work for recovery, but no ability to pay, your incredible
skill in the operating room and ability to instill trust in you will still not result
in a conversion.

Creating the Marketing Plan
Let’s say you have assessed the strengths, weaknesses, opportunities, and
threats for both yourself personally as well as your practice; you understand the
three types of consumers; you have created your USP; you have identified the
demographic group(s) to which you will market that USP; you have researched
the various methods to reach that demographic with your message; you have
unearthed information about the local competition; and you have checked
out your Marketing bridges. Now it is time to create the marketing plan. The
first step in creating the actual marketing plan is to create the brand image.

Branding: what is it and why do you need it?
Your brand is your icon to the public, or a “nutshell” representation of your
business. You are already familiar with the concept of branding. Think about
two brands you already know, for example, Cartier and McDonald’s. You
recognize these brand names immediately, and you clearly understand what
these two business entities do and do not do, along with the level of quality
they represent. For instance, the “M” in McDonald’s creates a mental image
of their Golden Arches brand, and you know it’s McDonald’s and not Burger
King. When you see Cartier’s logo, you immediately connect the information
stored in your brain from your previous exposure to Cartier through marketing
and personal experience. The goal is exactly the same when creating your
practice’s brand image.

Branding is based on consistency
Good branding creates a consistent message about the brand, defining what
that brand’s name represents and what its mission is. The brand has a consistent look with repeated fonts, colors, and style. There is a logo that visually
represents the brand. There is a tagline that reinforces the mission of the brand.
Furthermore, effective branding fosters recognition of the brand whether or
not one needs the product or service at any given time (remember the three
consumer types).

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Creating your brand mission
The public should understand what your brand stands for. What is the mission
of your business? While it may seem obvious to you, think about the broad
variety of plastic surgeons you know personally. Some are strictly aesthetic
surgeons. Some perform reconstructive surgery exclusively. Some do both.
Some of the strictly aesthetic practices perform only facial surgery, while others
offer a broader menu. This is when knowing your USP comes in handy! Here
is an example to get you started:
Brand X Plastic Surgery is an exclusively aesthetic practice devoted to facial
plastic surgery. Our patients are primarily adults who reside within 20 miles of
our office. Our focus is on deep plane facelifts as well as rhinoplasties, eyelid
surgery, and nasal reshaping. It is our goal to provide the highest level of patient
satisfaction through the establishment of an open and honest doctor-patient
relationship, the strictest level of patient confidentiality, the kindest care by a
highly qualified staff, and the safest surgical experience available in our AAAASFaccredited onsite surgical suite.

You can find a plethora of mission statements on the Internet by physicians of
all types that can help you create one that reflects your unique characteristics.

Collateral is an integral part of branding
Collateral is defined as all items that visually represent you to the public with a
consistent color palette, style, fonts, artwork, and message. Collateral includes
your logo, tagline, letterhead, folders, brochures, business cards, stationery,
internal signage — virtually every printed item about you in and out of your
office.

Thoughts about logo development
Develop your logo for the long term to avoid waste in time and money.
Although you can certainly order a logo from an Internet firm for US$300, I
suggest that you use a reputable freelance designer or a respected design firm
to get the best result. A good designer has an artist’s eye for color, style, and
balance. Ask to see a portfolio of designs he or she has created for others, both
physicians and non-physicians.
A logo need not include a visual image or icon; it can be your practice name
in a stylistic font or layout. There are literally thousands of fonts available for
purchase on the Internet through various companies; before agreeing to a
logo design, be sure to ask your designer for the name of the font and make

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sure it is not so common that it is in the list of fonts in MS word or a similar
word processing program. If you are ordering a logo based exclusively on a
font without the addition of an image, ask to see the logo in at least 5–10 font
styles and sizes.
Although a logo can consist of nothing more than text (think about
Google, which has no image), it is my opinion that logos with an interesting image are the most memorable. The image should reflect your business
type (plastic surgery) and associated ideas like transformation, beauty, and elegance. You want an image that will reflect your unique aesthetic style, whether
modern, abstract, or Baroque. The image should tie in with what you do and
it should be unique, but it should not be so trendy that it will go out of style
in two years. I have seen hundreds of logos whose meaning baffles me. In
some, strange squiggles and odd patterns that look like wheat or bugs are
slapped on top of someone’s practice name. I have no idea what they are or
what they mean. The message of any great commercial can be understood
even if the television is muted. Likewise, a business that is represented by a
great logo/tagline combination can be easily identified, at least by business
type if not by name.
When hiring a designer to create a logo, you should expect to have an initial
telephone or in-person consultation to discuss your color and style preferences
before the designer gets down to work. After that, you will generally receive
three to five rough sketches from which you choose one for final development. If you do not like any of the three to five that you are initially offered,
keep refining until you see something you love, even if it costs you more.
After all, you will be looking at this for many years, so you want to really
like it. Generally, collateral is paid 50 percent upfront and 50 percent at the
finish, though these details vary from one design firm to another. Be careful
of designers who charge you a set fee for two revisions and then hourly afterwards. Any good logo will have several revisions, and you should get a price
for a logo, not for a certain number of revisions. Obviously, if you go off on
a completely new tangent, it will cost more, so be clear with the designer so
that you do not end up with a huge unanticipated bill. Remember, printing
costs are additional.

Tips on taglines
Your tagline should describe a benefit to the consumer in 5–10 words.
Although this should be obvious, if you have to explain it to someone, it
is not a good tagline! Even though it is fun to create a tagline with a play on
words, it is not essential.

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Here are some tagline ideas to get your creative juices flowing:















Beyond Beauty
Isn’t it time to love the way you look?
The Beauty Full Practice
We’ll do your image good.
Look younger longer.
Reaching Beyond Beauty
Skilled hands sculpting beautiful results
Be transformed
At the heart of a beautiful body/face
Beauty Crossing
Why Compromise?
Skill and Experience Matter
Great Doctors Performing Beautiful Surgery
The Body Problem Solver

Other basic collateral for your practice
In general, every practice should have at minimum a basic practice brochure,
if not several brochures, to cover different surgical procedures as well as noninvasive and minimally invasive procedures, and a nice folder in which to
store paperwork that the patient receives. If you have an aesthetic center that
includes facials, massages, permanent makeup, and other spa items, you may
wish to create a brochure just for that part of the business. Alternatively, you
can create a practice brochure with a menu of services on an insert that covers
everything in one piece.
Although you can get pretty fancy with a brochure, I urge you to keep it
simple. The purpose of the brochure is to get the phone to ring. If you include
every minute detail about your business in the brochure, the consumer has no
reason to call you. Leave some details for later, and use the brochure to create
interest. A glossy or semi-gloss tri-fold is a standard that never goes out of style.
Beautiful stock photography, perhaps some testimonials, your biography and
headshot, a photo of the staff if you have one (and if your turnover does not
prohibit using one!), and an outline of your basic offerings are enough. Stay
away from too much text so that the brochure does not appear crowded or
fussy. White space is not just acceptable, it is preferable. Your business card
and practice folder should match the brochure(s) in style, font, and colors.
You may wish to create custom envelopes or have your designer simply make
labels for that purpose.

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Of course, you will need bags for retail purchases of skincare products and
anything else you sell in the practice. Be sure your name and brand identity
are clearly featured so that, when the patient carries the bag, it is a marketing
piece for you.

What about promotional items?
Some aesthetic surgeons shy away from promotional items because they think
such items are silly or cheesy or just a wasted expense. Depending on what
you choose, that might be the case. Cheap promotional items like pens, mugs,
and small notebooks are pretty cheesy; but worse, almost nobody sees them
once the consumer leaves with them. Investing in promotional items that will
(1) be used and (2) be used in public (like a beach bag, library bag, computer
case, insulated coffee mug for the car, or water container for the gym) will
create better promotional vehicles for you. You want your name and logo to
be conspicuously present for all to see, and these items are carried around
in public, whereas a pen generally hides in the patient’s bag or desk. Those
patients who wish to keep their beauty life a cherished secret will not want a
promotional item, and that is OK. Those who take them will provide silent
marketing for you every time they take them out.
A promotional idea I really love are laminated before-and-after cards for
patients to show to friends. It is incredibly simple to make these. All it takes is
a US$35 laminating machine, which you can buy online or at an office supply
store, some laminating sleeves, your business card, and the before-surgery and
after-surgery photos. Have your designer create a stack of business cards that
are the size of 3 × 5 index cards. One side is the business card; the other side is
blank. On the blank side, place two digital photos of the patient, one before
surgery and one after. Slide the cards through the laminator and voilà! You
have a fun piece that your patient can show around. I would advise against this
for breast work; but for almost any other plastic surgery procedure, laser procedure, or skin treatment, this is a perfect marketing vehicle. Women love to
show these things off, and your name and contact information are right there
for them to share. You can use regular business cards instead of 3" × 5" cards,
but we have found that the photos are too small to be a good marketing tool.

In-office signage
After investing in creating beautiful collateral, your in-office signage will want
to similarly reflect this aesthetic. I have been in many an aesthetic office where
the front desk staff has created awful-looking flyers to market specials, events,

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and the like. Be aware that everything a patient sees, smells, reads, and touches
affects their impression of you and your attention to detail. Marketing is an
all-inclusive sport, and you must insist that your brand always be displayed at
its best.

Creating Awareness of Your Practice
through Advertising
As mentioned at the beginning of this chapter, advertising is just one facet of
marketing. In our oversaturated world, brand messages are constantly beamed
at consumers on the TV, radio, Internet, bus benches, in the subway, on the
train, in every magazine … everywhere! How can you advertise without being
lost in the shuffle?

Some basic advertising rules
Rule #1: Know what you are selling
It is essential to understand what you are selling in your advertising. “Simple,”
you think, “I’m selling plastic surgery services.” Actually, if you are a smart and
savvy advertiser, you are not selling plastic surgery services. Smart advertisers
are not selling products. They are selling concepts — concepts of trust, reliability, dependability, integrity, safety, sexiness, beauty, youth. Your patients are
not buying breast augmentations, little jiggly saline or silicone jellies! They are
buying confidence, sexiness, youth, and allure. In every procedure or product lies the benefit of that procedure or product, and that is what you must
promote: the benefits, not the product.

Rule #2: Advertising must evoke an emotion to create
an impression
Remember the old AT&T advertisement that showed an elderly woman sitting
in her house, hoping her grown kids would call her? It has been about 20 years
since that advertisement was on television and yet most of us still remember
it! Why? Because it evoked an emotional response. We felt empathy for the
elderly mother, guilt that we might be just like her kids, and joy when the kids
called and made her day.
If your advertisement do not evoke some kind of emotional response,
you may as well save your money. “Blah” advertisements that promote this
month’s special without attaching the product or service to an emotion will

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only be noticed and retained by the ready-to-buy-now consumer (remember
them?). If you are spending money on advertising, spend it in a way that creates
an impression in the minds of as many consumers as possible, including the
will-be-ready-to-buy-later consumer and the referral source or second buyer.
Advertisements need not be overt or salacious to evoke an emotional
response. They can play with the emotions of joy, desire, wistfulness, pleasure,
lust, hope, yearning, pride, fun, etc. Instilling an emotion in your advertisements creates a memory in the minds of consumers. As more types of customers increase their awareness of your brand, you will build a bigger business
faster.

Rule #3: Advertising must be consistent
You are better off running a 3′′ × 5′′ advertisement in the same location of the
newspaper on a weekly basis than a big advertisement once a quarter. Why?
Because there are three consumer types and because it takes repetition to
instill awareness. If a consumer notices your emotion-stirring advertisement
in the newspaper this week, and next week she finally decides it is time to take
action but does not see your advertisement in the paper, then she is back to
square one.
It is the same with radio and TV advertising, but the investment is much
higher. If you are advertising on radio, you need two to three impressions per
day to get enough exposure to create a stream of response. Again, the advertisement needs to be fun or sexy or evoke another emotion to be remembered.

Advertising options
Print advertising
Although print advertising is the most popular, I hesitate to recommend it as
the return on investment (ROI), is notoriously low. Not only are most print
publications choked with advertisements compared to the amount of editorial,
Americans are not the readers they used to be and Internet marketing has
taken much of their market share. Depending upon your demographic target,
you might do better with radio, TV, mall boards, and the Internet than with
newspapers and magazines.
The only exception to this might be the supplements occasionally offered
by your local newspapers. There is generally an annual wedding supplement,
a health or medical supplement, and supplements on holidays such as the
New Year, Mother’s Day, and the winter holidays. At these specific times of
the year, I suspend my recommendation to avoid advertising in print media
simply because of the abundance of ready-to-buy-now consumers.

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If you are thinking about print advertising, focus on your demographic
group to make sure you are marketing in a manner and location that they
frequent in order to boost ROI. Ask the publication if they have an Internet
component and evaluate the worth of advertising there along with the print
advertisement. But again, I caution you to carefully evaluate print advertising.
If you decide to use it, focus on consistent, emotion-driven advertisements
located in the same part of the publication each time.

Mall boards
An incredibly underutilized advertising vehicle, in my experience, are mall
boards. People who go to the mall are consumers. They are shopping, not
sitting at home in front of the TV. Mall boards are generally very inexpensive
when compared to the “eyeball time” of print publications. The consumer
takes as long as he/she wants to absorb the information and, each time the
consumer walks by the mall board, he/she is impacted with the advertisement
yet again. Some mall boards include the ability to distribute brochures. Some
are digital and can show an interview of you or a short clip or even beforeand-after photos. Not to mention, mall boards are BIG! Generally 3′ × 5′ tall,
lit from behind, they are hard to miss. I confess, I am big on mall boards.

Radio advertising
Since any radio sales representative worth their sale will push you to
spend US$7,000–US$10,000 a week on radio advertising, be aware of the
following:
• You will get just as much consumer impact in a 30-second advertisement
as in a 60-second one.
• Some stations have 15-second advertisement options. Repeated often
enough, they can be effective.
• Go to www.arbitron.com to identify the top radio stations in your market.
• Know what your demographic listens to! Ask current patients what they
listen to and do not depend on the sales representative to guide you. A
listening audience aged 25–54 years is a pretty broad spread and the representatives seldom subdivide beyond that point.
• Price is time-dependent, with AM and PM “drive times” (when people
are in their cars commuting, i.e., 6–10 am and 3–6 pm) being the most
expensive.
• Most stations have remnant spots available and some have a Business Builder
option for new advertisers.

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• Your advertising copy and voiceover are generally included in the price.
• For more impact, consider endorsements. An endorsement is an on-air talent endorsing your practice during his/her radio show. You may be able to
barter service for service, assuming this does not violate the ethics code of
your medical board or certifying organization.

TV advertising
Television advertising, like radio advertising, is extremely demographicspecific. Insist on good demographic numbers before handing over your
money. Cable is often a good bet, particularly shows that focus on style,
women’s issues, and, naturally, plastic surgery.
Your local ABC, CBS, NBC, or Fox affiliates (in the U.S.) often have
remnants and short advertisements to offer. But remember, it is a waste of
advertising dollars if you are on at 5 am on Sundays!

Internet advertising
Portals are the most popular Internet advertising sites for plastic surgeons. A
portal is a website that allows access to different sources or services. I urge
caution when considering portals. You must insist on website statistics, and ask
someone in the search engine optimization (SEO) business to run an analysis
of their site before you read your credit card number to the representative.
Untold numbers of portal site representatives tell me that they are on the first
page of Google for keyword phrases that sound great but, when analyzed,
prove to have little traffic-driving value.
Keep in mind that portals are your competitors on the Internet. The
US$5K–US$10K you spend to be a member on NameMyCupSize.com
(can you tell I made that one up?) could be better spent optimizing
your practice website to attract local consumers to your services. Even if
NameMyCupSize.com has you listed first on their site for your city, sooner
or later you will share space with your local competitors with little ability to
differentiate yourself. To the consumer, you and your competition will look
like so many pigeons on a telephone wire.

Push vs. Pull Technology
Now that we have reviewed advertising, let’s compare and contrast the difference between push and pull technology. This will help you quickly understand

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why public relations and internal marketing carry so much more weight than
advertising.
Imagine a consumer standing in the doorway of your practice. She is not
sure whether to come in or not. Pull technology will “pull” her into the practice
with promotions such as discounts, one-time specials, and the like. Conversely,
Push technology utilizes the opinions of others to “push” the consumer toward
your practice. Push technology includes things like media interviews, referrals
from others, community involvement, public opinion, and any other kind of
third-party endorsement.
Public relations, or PR, is essentially push technology. So is internal marketing. Let’s review internal marketing first, since it is generally the least expensive, the easiest to obtain, and the most effective form of marketing available
to you.

Internal Marketing: What it is and Why
You Need it
The first time I heard the phrase “internal marketing” in graduate school, I
thought it was some kind of black market organ trade. I soon learned that it
was an expression to describe marketing to one’s past customers both to keep them
coming back and to get new customers through their personal network of friends
and family. Studies have shown that the fastest way to your next patient is via
the satisfied patient sitting in your office right this very minute! Imagine that!
But wait, it gets better!
Envision a database full of satisfied patients. It is almost like hidden treasure, isn’t it? Oddly, most companies that treat their customers exceptionally
well never ask their satisfied customers to refer friends and family members.
How silly is that? What’s that, you say? You have a database full of current and
former patients but you do not stay in touch with them, and you do not ask
them to refer you to their friends and family members?
It is not uncommon that plastic surgeons fail to capitalize on the immense
wealth hidden in the database inside their office computers. Some feel it is
not professional to ask for referrals, as it makes them feel like a huckster or
used-car salesman. Some think that satisfied patients will automatically refer
others without being asked. Of course, some will, but many will not. Why
not? They simply get busy and do not think to do it.
Let’s use an example from your own life. Unless you bought your practice
from another surgeon, it is likely your home is your most expensive purchase.

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But let me ask you this: do you remember your realtor’s name? If you do,
it is either because they are related to you or because they have continued
to market to you via email, the occasional holiday card, or something similar
which keeps your realtor’s name in your memory bank. Did you ever refer
anyone to a realtor, sales, or service person who served you well? Probably
not. Why not? Because you had no compelling reason to do so. It is the same
story with everyone, including your patients. We are all so busy. There are kids
to raise, dinners to cook, events to attend, tennis balls to hit, work to do —
the time just flies by. It is not that patients do not appreciate you — they do,
generally — it is that they just get busy. The bottom line is, you must ask or
you will likely not receive.
How can you create a compelling reason for a past patient to refer you?
To start, one way is to have fewer past patients and more current ones! Are
you consistently cross-selling your patients both before and after a surgical
procedure to keep them engaged with your practice? I had a facelift a few
years ago (no, it is not the vitamins, I am willing to admit to going under the
knife), and my surgeon never said a word to me about skin care, either before
or after. Although I truly appreciate that surgeon because he did a terrific job,
I have not seen him in three years. Had he taught me about good skin care
himself or connected me with his aesthetician, I would probably have had a
few laser treatments by this time and heaven knows how many boxes of lotions
and potions I would have purchased in the intervening three years. To be fair,
I am in the business and am the frequent (and grateful!) recipient of untold
syringes of Botox® Cosmetic and a plethora of dermal fillers, both because
of my intense willingness and because I am the “old broad” who is a logical
choice to be a demonstration model at our clients’ events. But your patients
are different. They are not getting free or highly discounted services from a
slew of great plastic surgeons. So how can you keep them both in the loop
and referring their friends and family? By creating compelling reasons to stay
connected, that’s how.
We live in a disconnected society. People seldom have the deep roots our
parents had to neighborhood, community, church or synagogue, clubs, and
bowling leagues. We move around more, change jobs more frequently, even
change careers more frequently (U.S. Department of Labor statistics show that
the average person has three to five careers in a lifetime). We crave connection,
but life moves at a dizzying pace compared with 20 years ago.
I am going to suggest something radical. I am going to suggest that if you
find ways to create community with your past patients, you will keep more of
those past patients in the loop and you will find that they will involve their
friends and family members.

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How do you create community with your past patients? By continuously
reaching out to them without always selling to them, as explained in the
following examples.

Do you publish a monthly e-newsletter or a quarterly
mailed newsletter?
Consider doing so if you do not. It is six times more expensive to get a new
customer than it is to recycle a former customer back into the sales cycle with
new products. Each newsletter should have an informative topic about skin
care or leading a more balanced life, a nutritional factoid you found in the
news or on the Internet, a new treatment protocol, or something similar to
keep patients aware of your practice. You can offer a special for the month, but
you do not have to. Just by offering helpful information, you will keep them
in the loop, create and reinforce a sense of community with them, and benefit
them in some way. The fact that you are sharing helpful information without
trying to sell them something is a subtle gesture that will not go unnoticed.
Oddly, these types of newsletters have been shown to increase patient loyalty
even without an advertised special or discount.
As a recipient of many plastic surgery newsletters, I have to say that most
of them are just marketing pieces. I do not feel like part of a community when
I receive them. I feel like I am being sold to. It is something to be aware of.
How about a fun feature in the e-newsletter, like a drawing every month from
the list of readers? You can easily identify who opened the newsletter. Pull a
name at random, give them a free microdermabrasion or intense pulse light
(IPL) treatment or tickets to some event, take their photo when they come
into the office, and put it into the next e-newsletter to show your readers who
enjoyed the gift last month. Include a “Patient of the month” story if you
have a willing patient who will share his/her before-and-after photos. (Think
patients will not do this? You need to go to some of the plastic surgery sites
on the Internet, where women gab for days with other women undergoing
similar procedures. They post before-and-after photos and share amazingly
intimate details about themselves — all to strangers. That is how much we
crave connection in our world.)

How about a Patient Appreciation Day for current
and past patients?
I do not mean just a discount day, but a real Patient Appreciation Day. You
schedule it in advance, let your patients know about it through your monthly

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e-newsletter or through a postcard invitation, and on a specific date they come
to a local restaurant (or your office if it is big enough) and enjoy a beauty
brunch with a presentation from the aesthetician about skin care and a little
chat from you about the latest new happenings in plastic surgery. Invite your
top 100 patients and 25 will come. Tell them you would love them to bring
one friend each and ask them to RSVP. Think this is cheesy? You might be
surprised how many women enjoy this! Those who do not will stay home.
Those who like this kind of thing will come and bring a friend or even two,
some of whom will book consultations that lead to procedures due to that
third-party endorsement.
How about involving some of your patients in an annual Toys for Tots
project during the holiday season? Have a holiday party in which the only
requirement for admission is that they bring a toy for a child and put it beneath
the Christmas tree, which they will help decorate. Have a cookie exchange and
ask attendees to bring four dozen cookies. They choose from everybody else’s
platter and leave with a different four dozen. Think this is beneath women
who have plastic surgery? Sure, it is for some. But not for most. Look at any
holiday magazine and you will see women enjoying these kinds of events.
Why leave all the fun stuff to the Junior Leaguers? There is no reason why
you cannot create these events for your patients to enjoy. If you have them
in the office, they are bound to notice the various new services or procedures
you have added since they were last there, and that curiosity leads to bookings
for you.

How about friends and family referral cards?
These are easy! Have your designer do a two-up vertical layout which describes
your Friends & Family Referral Program. It has three tear-off cards that are
perforated by the printer for easy removal. Your patients write their names
on each card and share them with friends and family members. When a referral comes to the office and presents the card, he or she enjoys a $50 discount off his/her first appointment, and the referring individual “banks” $50
toward his/her next treatment. Giving a discount is not, to my knowledge,
against any ethics rules, but check with your board or organization to be
sure. Alternatively, instill a “points program” which provides special pricing
to patients based on their activity in your office: they rack up points each time
they come in and purchase a service or product. There are reward programs
that can be entirely managed online with little involvement from you and
your staff.

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Are you sending birthday and Thanksgiving cards?
Everybody loves getting a birthday card, yet almost nobody gets one anymore. If I get one more virtual rose in my email inbox, I will cry. The last
person to send me a real birthday card was my Nana; I was 12 and there
was $5 in it. Export your patient database by their month of birth. Purchase
birthday cards in bulk or, better yet, have your graphics designer make one
that represents your brand. On the first of every month, send cards to all the
patients whose birthday falls in that month. Sign it or have a staff member sign
your name. Offer a free microdermabrasion in honor of their birthday. Print
the addresses right on the card with a script font. If you have a lot of them,
your local printer can do this for you. Avoid address labels, as they are too
impersonal.
Everybody gets holiday cards, but almost no one gets a Thanksgiving card
so, if you send one, it gets noticed! It is a perfect time to thank patients for
entrusting their care to your practice.
Think these ideas are cheesy? Most patients will interpret these gestures
as warm and inviting, reflective of a plastic surgeon who values them as a real
person, not just as a number in the database.

Invite your past patients to webinars
As previously mentioned, people are busy. Webinars are easy to put on and do
not require office space, wine, or cheese! There are services that allow you to
invite patients to learn more about a specific procedure or new product in the
comfort of their homes while viewing the webinar on their computer screen
and listening via phone to your presentation. You can record these and save
them on your website for later listening.
You will find that efforts to involve current and past patients will reward
you with a steady stream of appreciative and loyal customers. Yes, it takes work
to keep patients in the loop. You didn’t think building a business would be
easy, did you?

External Marketing: Finding New Patients
External marketing is essential to create growth. Community events, seminars, and cross-promotions with similar business types (beauty and selfimprovement businesses) can help bring in new patients.

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Community events
Community events can offer great visibility. Women’s expos, bridal shows,
and the like, if they have good attendance, can expose your practice to those
who might otherwise have no idea you exist. Keep in mind that bridal events
can be especially lucrative, if done correctly, as they are made up of ready-tobuy-now consumers — they have a deadline and they want to look great for
the wedding. This includes the bride, her bridesmaids, and her mother as well
as the groom’s mother.

How to get patients from an expo
First of all, have a booth that is attractive and inviting. Show before-and-after
photos on an endless loop so that visitors stop and look. Give samples of
skincare items. Have the aesthetician attend with you to offer complimentary
treatments that work for most women. Take your VISIA, computer imaging
software, or other participatory device. Be there during specific hours, as the
attendees will want to meet you, not just your staff. Have a raffle for a skincare
line or aesthetician treatment that gives you the names and emails of those
interested in aesthetic improvements (you can add them to the email database
after the show). When the show is over, follow up with the attendees: send a
specific email to those who attended, inviting them to the next in-office event,
and keep marketing to them through your e-newsletters.

Cross-channel affiliates (CCAs)
A cross-channel affiliate is anyone who serves your demographic:









Image consultants
Personal trainers
Makeup artists
Upscale nail and hair stylists
Bridal salons and upscale lingerie boutiques
Concierge services
Massage therapists
Cosmetic dentists

What can you do with CCAs? You can run advertisements together, create
cross-promotions, organize events, share brochures in one another’s offices,
and/or contribute to their newsletter (and they to yours). Essentially, the

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goal is to do presentations on their turf with their customers/patients so
that their database is exposed to your practice and vice versa. When done
correctly and consistently, working with cross-channels can be extremely
profitable.

Seminars
When we discuss seminars with new clients, they inevitably say, “I hate doing
seminars. Nobody comes but the same patients, I end up paying overtime,
and I would’ve treated those patients anyway.” True enough, if you are
not doing them the right way. This is where those cross-channels can be
handy.
We generally schedule one event a month for each of our clients. One
might be doing a joint presentation with their image consultant at the practice.
Another might be holding an event with a personal trainer at the trainer’s gym.
Yet another might be speaking to a local women’s group.
You will want to invite all past and current patients, while being certain
that the other party (personal trainer, image consultant, etc.) also invites their
database. Create oversized postcards as invitations and mail them out. At
the time of this printing, an oversized card runs around US$0.80 including
printing, labeling, and postage. Have a staff member distribute them by hand
to invite employees in the other offices in your building, and drop off 20–50
cards at each of your local hair and nail salons. We recommend doing a raffle
and giving patients extra raffle tickets for each additional (non-patient) friend
whom they bring along to encourage attendance (be sure to put that on the
invitation). Keep the time short: 90 minutes is plenty of time for your average
small event.

Non-profit involvement
Local non-profit organizations often have fundraising galas, golf tournaments,
and other events, to which you can donate an item for the silent auction or
gift certificates for goody bags given to attendees. As attendees repeatedly
circle the silent auction tables, your brand is repeatedly impressed upon the
attendees. Not only that, but attendees see you as a community member who
is philanthropically minded, adding more value to your brand.
Call the United Way for a list of non-profit organizations. Find out when
they have fundraising events. Those events with the highest price per seat
are the best in terms of finding attendees who match your demographic. For

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obvious reasons, avoid political or controversial events. Keep in mind that
the value in these events is not necessarily your attendance, but the ability
to repeatedly offer your brand to the core group of wealthy individuals and
couples who attend these events.

Public Relations
What is PR?
PR stands for “public relations”. PR is your relationship with the public. PR
is important because, unlike advertising, it brings along third-party validation
that you just cannot get with advertising. Your PR agenda is initially defined
by your brand (you) and is then moved forward by “your people,” which can
be your publicist or PR firm, you and your computer, or you plus your staff
and your mother.
When plastic surgeons talk to me about public relations, they are most
often seeking media relations — how to get the media to notice them and
want to interview them. Although many think that it is a simple matter to
send out press releases to get the media’s attention, as my mother used to say,
“If it were easy, everybody would do it.” Mom was right.
Simply put, you cannot get media coverage unless you are in a RUT:
1. Relevant — Is the story relevant for that particular media outlet’s audience?
a. A story about “mommy makeovers” makes sense in Parents magazine,
but not in Vogue.
2. Unique — If the story has been done already, it is not newsworthy unless it
has a new twist or a great background story. Weight loss stories have been
done to death, but if Oprah loses 60 pounds it makes the news.
3. Timely — Does the story fit into the media outlet’s calendar for this type
of information or is it fascinating enough to stand alone?
a. Some outlets only do plastic surgery stories on a particular schedule.
b. Timeliness also refers to trends. If there is a trend in plastic surgery, it
is good to let the media know about it.
c. Features about plastic surgery are not timely if we have just been
attacked by a foreign enemy or if the stock market has just collapsed.
At a time like that, even a great plastic surgery story will end up on the
backburner with all the other luxury items.

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Below are some pointers based on my experience in securing media coverage
for plastic surgeons.

Press releases evoke little to no response on the part
of the media outlets
Most media representatives (bookers, writers, newscasters, etc.) do not create
stories based on press releases emailed or faxed to them or found during an
Internet search. This is because media outlets and their individual journalists
and guest bookers receive hundreds, if not thousands, of media pitches on any
given day. They throw out anything that is not sent by someone they trust or
that is not obviously newsworthy. Unfortunately, most plastic surgery stories,
particularly about cosmetic procedures, are not newsworthy. Unless you have
invented the procedure, it is brand new, or you have a patient willing to “bare
it all”, you might not have enough to get you on the 11 o’clock news. If
you have donated your services overseas to indigent children, you might get
a mention on a small, local program, though even those stories are generally
not deemed newsworthy.

As a rule, it is generally easier to get newspaper
exposure than television exposure
Newspapers have a certain amount of square footage to fill and, if breaking
news is “down” that day, they might fit your story into that day’s press run.
TV stations, on the whole, have downsized tremendously since the onset of
cable TV, and both cable and affiliate stations are feeling the pain of advertising dollars lost to the Internet. Prior to cable, almost every market (even
the smallest, one) had its own morning talk show during which anybody with,
say, a new avocado dip recipe could get a five-minute interview. Unfortunately,
those days are gone. National talk shows and morning talk/news programs
(like “Good Morning America”, for example) rule the day. It is extremely
tough to get on those programs, unless you have (1) a PR firm with which
the media outlet already has a trusted relationship; (2) a new book that is
significantly different from the other five plastic surgery books they promoted already that year; (3) a fascinating patient story, and you can bring
the patient with you (easier said than done, as most patients do not want
publicity about their procedures for obvious reasons); (4) a procedure so
new that it is essentially breaking news; or (5) an opinion about a growing
trend that is newsworthy to the consumers who watch that program, which

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is often the case immediately following the annual release of plastic surgery
statistics.

Media relationships must be cultivated in order
to obtain coverage
That is why it is called media “relations”. This does not mean that you necessarily need a PR firm to promote you, but it generally moves things along
more rapidly simply because the media representatives (journalists, producers, reporters, bookers) have existing relationships with the PR firms. The PR
representatives know how to approach the media to get things done, and the
members of the media know that professional PR firms will not waste their
time with pitches that are not newsworthy. If you wish to approach the media
without a PR firm, then you must cultivate a relationship with the media
representatives in your area in order to be heard when something interesting
occurs for which you would like to be interviewed.
How does one do this? First, by taking the time to research what the media
are writing about before you approach them with your agenda. Just like you,
journalists have a job to do. They are not interested in your agenda unless
it serves their agenda. So, prepare in advance before you approach a media
representative. Read their byline or watch their program so that you know
what they are all about. To break the ice, send emails or snail-mail letters to
compliment them on stories that you enjoyed. Send them helpful information
about your profession in case they might need it sometime down the road.
Depending on the size of your local media outlets (Miami vs. Omaha,
for example), you need to identify all the journalists or media representatives
who work your “beat”. Aesthetic surgery can be covered by several different beats: lifestyle, health, medicine, or women’s issues, as well as the generic
assignment desk. Once you have identified the right people, call them one
at a time. Your identifier as “Doctor” has enough power to get you past the
secretary in almost any media outlet (OK, probably not Oprah, but almost
everywhere else). Armed with the media’s most recent story on plastic surgery,
call him or her to offer a compliment, and then confirm that the individual
you are speaking with does, in fact, cover plastic surgery. Ask if he or she
has anything else coming out about plastic surgery in the near future for
which you might be a resource. Do not push your agenda. Just offer to be
a resource. It will get you farther faster than pushing to be on their TV program or in their newspaper. If you are helpful, polite, and patient, your time
will come.

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Keep in mind that journalists are difficult to reach because they are overloaded. It was not always that way but, since the onset of cable, the local
affiliates (ABC, NBC, CBS, CW, and Fox) have had to downsize as their
advertising income has been split up among more outlets. The media representative or journalist who previously covered health and medicine now covers
kids’ topics and cooking as well as health and medicine. Hence, he or she is
torn in many directions. If you want to create a relationship with a media
outlet, you must penetrate the blinders the media wear just to get through
the day.
One of the biggest complaints journalists have is that their email inboxes
are full of mass emails that are not targeted to their area of expertise. Avoid
sending mass faxes or emails to a list of journalists. Rather, pay attention to
what they are writing and what they have written lately to see if you can identify
a trend. If they say plastic surgery is for insecure people, that is probably not
a journalist you want to approach about your new laser technique. Although
this seems obvious, other than PR firms, most people do not do their research
before approaching the media, and this can be a fatal mistake. Once you tick
off a media representative, they may never want to hear from you again.

Booked for a TV interview? These top 60 media tips
can help!
I think the very best way to do media training is with the use of a video camera.
Have a friend interview you, so you can watch yourself in action. It is the very
best way for you to evaluate yourself because we often do not believe we do
the things we do until we see it for ourselves!
These are the specific issues that generally need to be addressed:
• Speech pitch, modulation, and speed
◦ It is important that you maintain a normal pitch. People quite often
speak in a higher pitch or become squeaky or strident (or even shout!)
when nervous.
◦ The microphones are sensitive. You need not speak with a loud voice.
◦ Speak at a moderate rate (not too fast) and speak clearly, particularly if
you have a strong accent.
◦ Remember your audience, and avoid too much jargon or industry-speak.
◦ Avoid speaking in a monotone. Add inflection in the voice (the ups and
downs of a normal speech pattern).

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◦ Do not end every statement as if it were a question. People often do this
in strange situations like on camera.
◦ Ixnay the speech tics: “umm”, “ahh”, “and-uh”, “ya know”, and the
ever-ubiquitous “like”.
◦ Avoid colloquialisms such as “he went” instead of “he said”.
◦ SPEAK UP. No mumbling, throat clearing, or distracting noises.
◦ THINK before you speak. It is OK to give yourself time to gather your
thoughts. This helps avoid saying “ummm” and other nasties. Unless
the interview is live (which is rare these days), the editors can delete the
short empty space. It is usually a lot shorter than you think it is, so do
not jump on top of questions. Give yourself the time you need.
• Appearance
◦ Avoid rocking back and forth, licking or smacking your lips, touching
your face or hair, waving your hands around, and moving around in the
seat. Especially avoid putting your hands anywhere near your nose, for
obvious reasons.
◦ Tuck your chin under, and keep your neck long and relaxed like a bobblehead doll. This will keep you from slumping. Slumping makes you
look weak and old.
◦ Keep your shoulders down and back, with your eyes looking up either
into the camera or into the eyes of the interviewer. Keep your chin down!
You do not want the video guy shooting from beneath you and showing
only your nose hairs! (Take care of those hairs before you get there.)
◦ Do not constantly reshift your focus. Look at either the host or the
camera for as long as comfortable while speaking. Look over the host’s
shoulder if staring in their eyes distracts you. Otherwise, you risk looking
“shifty” and this negates your power.
◦ Sit toward the front of the chair to appear as tall as possible.
◦ Keep your hands in your lap or at your side (if standing). You do not
need them; they are a distraction.
◦ SMILE OFTEN. If the topic is not something to smile about, at least
imagine something pleasant so you are not frowning. Watch CNN; those
guys can deliver catastrophes and still appear pleasant and trustworthy
while doing so.
◦ Avoid stripes and herringbone or checkered patterns; and do not wear
loud ties, shirts, or dresses that will appear like a blur on TV. Soft blues
and solid colors are best for television.

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◦ Women, please, no fussy clothing like ruffles, frills, or loud jewelry. It is
distracting.
◦ Make sure all the buttons button easily without pulling, and make sure
your clothing fits you well. You will look thinner in clothing that is
slightly large compared with clothing that is too tight.
◦ Do not buy a new suit or outfit and wear it for the first time on TV. Wear
it a couple of times beforehand at home, sit in it, and walk in it. Check
to be sure it does not bind or cut into you anywhere, as this will be even
more distracting under pressure and hot lights!
◦ Men, if you are wearing a suit, unbutton all but one button when standing; unbutton all when sitting.
◦ Wear something comfortable to the studio, and change when you get
there. DOUBLE-CHECK to make sure you have everything before you
leave home!
◦ Once you are dressed, do not eat anything. Drink only through a straw;
otherwise, this will be the time you spill coffee all over yourself.
◦ Do not get a haircut the day before; get one a week before.
◦ Make sure you have your roots covered if you color your hair.
◦ Ask them in advance if they plan to do makeup. If they do, do not wear
any that morning. They will take it all off anyway.
◦ Men, if they do not do makeup and you are bald, ask them to powder
your pate or bring your own powder. Powder yourself before you put
on your clothes to avoid getting powder on them.
◦ Ladies, if they do not do makeup, ask the host’s makeup person to check
your own makeup. They are almost always happy to oblige and have an
absolutely perfect eye about what is too much and what is not enough.
Bring your makeup and brushes with you in case the artist wants to add
something on top of what you applied at home.
◦ Do not wear false eyelashes unless you wear them on a regular basis.
◦ If you can bear it, do not wear your glasses as they create a glare.
However, if you are truly blind without them, it is better to wear them
and have some glare than to fall down or trip over something walking
to the host’s guest chair!
◦ If you wear contact lenses, think about what you will do if you get dust
in them on camera or if they dry out from the lights. Leave them in your
case if possible (see warning above about falling).
◦ The lights are HOT and you will be excited and/or nervous. Wear plenty
of deodorant. No obvious sweating allowed.

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◦ If you sweat when nervous, take a damp cloth to dab your face when
the camera is pointed at the host. Make sure the cameraman knows you
might do this if you are a “sweat-er”. Believe me, they have seen it before,
and they are happy to avoid shooting when you are wiping yourself. They
really do not want to shoot you with sweat dripping off the end of your
nose. If you have makeup on, do not wipe the sweat off your face; just
dab it.
◦ Men who are wearing a suit jacket can put a small, cold, damp cloth
or a soft, cold pack (not frozen!) under their T-shirt against their back
to keep them cool under the lights. Ladies can slip a little something
over their bra in the back. That tiny bit of cooling can really save
you. Make sure it does not show and that the wetness does not come
through. If you decide to use a cold cloth or a cold pack, take someone with you to help with placement so that it does not fall out on
camera!
◦ Consider teeth whitening before going on camera, as normally white
teeth look dull and gray from the intense lights.
◦ Get plenty of sleep the night before and drink a lot of water so that your
skin is nourished.
◦ If sleep is difficult because you are nervous/excited, have a turkey sandwich and a glass of milk before bed.
◦ For the same reasons, avoid alcohol the night before.
◦ Floss before going on camera.
◦ Put a tiny bit of Vaseline on your upper teeth. If your mouth gets dry,
at least your lips will not stick to your teeth!
◦ Do not chew gum on camera or beforehand. It dries your mouth, and
you look like a cow chewing its cud if you forget to spit it out before the
interview starts.
◦ Go to the bathroom several times before filming starts and one last time
about 10 minutes before they start filming. Nervousness makes most
people want to urinate (or worse!), and you do not want bodily urges
occurring while you are trying to look great on camera.
◦ Do not interview on an empty stomach. If your gut starts gurgling, the
microphone just might pick it up, especially if you have a lapel microphone attached to your clothing.
◦ If you are wearing a jacket and are seated before the camera rolls, pull
the jacket behind you and sit on the bottom edge of it so that it does
not bunch up at the shoulders. Pull the sleeves down before the camera
starts so that the sleeves are not bunched up. Do not do this, however,

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if you must walk onstage and then sit down while the camera is already
rolling, because this looks a bit odd.
◦ Do not be afraid of the little red light. The light is your friend; it is your
audience. Imagine all the little tiny people inside the camera who are
clapping and cheering and hanging on your every word.
◦ Remember that you have a right to be there, and that you have something
important to share with others.
◦ If you are horribly nervous, imagine the host is naked and sitting on
the toilet. Laurence Olivier used to peek outside the edge of the curtain
before each play started and whisper to the audience, “Damn you! Damn
you all!” to put himself at ease. Imagine whatever works to put you at
ease.
• Content

◦ Never appear on a program that you have not watched before you
become a guest.
◦ If possible, make bulleted notes about your anticipated topics on cards
and review them three to five days prior. You will not always know what
the interviewer will ask you, but this advance preparation can help you
recall specific points you wish to make.
◦ Do not use the cards on camera.
◦ Ask the segment producer to give you (in advance) an idea of the questions that will be asked. They cannot always do this, as the host will often
make up the questions that day, but you should at least know the orientation of the segment in advance so that you can do some preparation.
◦ Never say anything you cannot document by a third party unless you
specifically say, “It’s my opinion that …”.
◦ Never say anything that can get you sued.

• Maximizing the PR benefit of being interviewed

◦ Either you or your publicist should provide your biography. Confirm
that the interviewer and segment producer have it so they can give the
audience the salient points about you. Their goal is to show the audience
that you have the gravitas to be sitting there in an interview, so make
sure to give them only the information that proves your expertise.
◦ Make sure the interviewer knows what to call you: “Dr. Smith”, “Brad
Smith, MD”, “Brad”, etc.
◦ Make sure they can pronounce your name. Introduce yourself to the
host in advance. If you have a difficult last name, make a little joke
about this and say, “I have a difficult last name. It’s pronounced this

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way:_________.” They will thank you for it, if not outwardly, at least in
their own mind.
Be sure your name appears on screen at least at the beginning and end
of the segment. Preferably it runs underneath the entire time, but this is
tough to get.
Be sure to ask for, and make sure you receive, a DVD or an MP3 recording
of the segment for your website and to put on You Tube and other video
sites. Get the name of the person who is in charge of this so that your
staff or your publicist can follow up and get that footage.
Make sure that the segment actually gets put on your website!
Notify every patient in your practice database that you are going to
appear on, say, “What’s Happening Now” on NBC on Tuesday May 13
at 8 pm, so that they can watch it.
Next time you hold an event, be sure you show the segment to your
visitors.
You can use this segment when pitching for more media exposure; show
media representatives the tape so that they can see how comfortable you
are on camera.

Marketing is Essential in Building
Your Practice
Consistent, demographic-focused marketing and public relations can build
your practice and brand from a “no name” to the “big name” in your area.
Since many items pertaining to marketing can be done by you and your staff, I
encourage you to get started. Anything you do is a step in the right direction,
so do not think of marketing as an all-or-nothing event. Get going, have fun,
and build your business!

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Online Marketing
Ryan Miller

O

nline marketing is a broad term used here to describe all activities your
practice may engage in to increase awareness about yourself, your services, and your practice using the Internet. Many surgeons are put off by
the notion of marketing in general. This aversion is exacerbated by the very
technical nature of online marketing.
Luckily, overcoming that aversion is easy. Ask your next 10 patients if
they, at any point while preparing for their procedure, turned to the Internet.
Chances are that at least eight of them will say yes, affirming the importance
of sharing your message online.
Keep in mind that you are not “selling surgery” online. Your Web site
allows you to educate your current patients as well as prospects about your
experience, your procedures, and your practice. It is also your vehicle to
present a case for why a man or woman who is considering plastic surgery
should choose you for their consultation.
Some surgeons believe the cost of online marketing to be an unnecessary
expense, but they cringe when they think of the untraceable return on investment offered by offline marketing efforts in newspapers, the Yellow Pages, and
radio. Every day, more people abandon offline sources like the Yellow Pages
in favor of online marketing platforms. Online marketing, when run wisely,
can be a profit center with an undeniable investment return.
The operative word, of course, is “wisely”. This chapter seeks to share
some Web marketing wisdom, information, and tactics that will help you plan
a productive site, select a skilled vendor, and supervise the marketing and
maintenance of your Web pages.
Online marketing is “always-on” marketing. If you put in the investment and the effort to ensure that your site can be easily found by people
in your local area, you will have a workhorse promoting your practice day and
night, whenever a person decides to look closer at their options for surgery
or skincare.

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I am challenging you right now to change the way you look at Web marketing. Toss out the old passive advertising idea that might encourage you to
post a brochure-like Web site on the Internet and then forget about it. Reset
your expectations, and demand a site that serves, educates, retains, and attracts
patients by actively marketing to your online target audience. Create a site that
reflects who you are as a surgeon, informs patients about their procedure(s)
and your industry, encourages loyalty and referrals, creates operational efficiencies in the front office, and guides interested prospects off the Web toward
an in-office consultation.
Now let’s turn to the steps you will need to take and the choices you will
need to consider to develop and maintain a Web site that meets all of these
complex and interwoven objectives.

Define Clear and Actionable Objectives
A great many online marketing initiatives fail. Chief among the reasons for
a failed Web project is the lack of clear objectives, articulated expectations,
and a cohesive plan. A Web site is more than a must-have for the modern
plastic surgery practice. Executed properly, it can strengthen relations with
current patients and attract more new patients to your practice than any other
marketing vehicle.
Many plastic surgeons approach their first Web site with two simple expectations — they want a site that is attractive and cheap. Some ambitious practices
might also proclaim the need to “get it done fast”. A site erected from such
an uninspired vision will almost certainly lack the substance and functionality
to benefit the practice or their patients in the long run.
So what can a Web site do for your practice, other than sit there and
look pretty? A site can build your brand and help you extend the image you
wish to portray to your local community. It can provide education about your
training, your procedures, and your industry. It can encourage past patients
to talk you up to their friends and make life in your front office just a little
bit easier. Moreover, it can be your single most prolific source of new patient
referrals after word of mouth.
Be careful not to dismiss the potential of online marketing based on your
reputation or years in practice. In July 1993, The New Yorker published a nowfamous cartoon in which a dog is seated at a computer, telling another dog,
“On the Internet, nobody knows you’re a dog.” While the comic poked fun at
people’s propensity to exaggerate their beauty, youth, and charm in online chat
forums, it also uncovered an important opportunity that is often overlooked.

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On the Internet, nobody knows that you are a great surgeon. Nobody knows
that you are new to practice. Nobody knows about your specialized training.
Regardless of your reputation and experience, you have the obligation and the
opportunity to retell the story of who you are to an online audience. Every
surgeon has the same opportunity to profit from online marketing.
Not every surgeon will have the same objectives or expectations. Begin
by listing the things your new site must accomplish. Decide how you will
measure the success of your site. Be as explicit as possible. Each of your goals
should have a direct impact on the appearance, structure, content, tone, and
promotion of your site. The last thing you want is to have completed a site,
only to realize that you failed to include elements to satisfy specific objectives.
In our experience, most cosmetic surgeons want a site that will:
1. Present an attractive and professional image that reflects the identity of the
doctor and practice;
2. Support the needs of, and strengthen the connection with, past patients,
thereby encouraging repeat patronage;
3. Educate potential patients about the providers, services, and results delivered at the practice while encouraging in-office consultations; and
4. Achieve and sustain top search engine rankings for the words and phrases
used by prospective patients in the target market.
Dive deeper into any one of these broad goals, and you are likely to find that
you have more explicit expectations than you thought at first. Many doctors
desire motion, animation, and interactivity as much as an attractive design. It is
common for accomplished surgeons to request a site that highlights the value
of their training and certifications. Some mandate that the site demonstrate
their interest and experience in one particular procedure. Each of these smaller
goals will shape the site’s design, functionality, content, tone, and coding. If
you fail to name your expectations now, you can be certain that at least some
will be unmet when your site is finished. Before you do anything else, take
time to document your expectations up front.

Select an Experienced and Reliable Vendor
Selecting the right vendor or vendors to create and promote your Web site
can be as important as choosing reliable legal or financial counsel. Your Web
vendor(s) will be charged with representing your practice to the world online,
managing your online marketing, and attracting a significant percentage of
your new patients.

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Any vendor you select will be a long-term partner, so take the time to do
this right. Changing Web vendors is a costly proposition; a poorly executed
switch from one vendor to another could disrupt the availability of your Web
site or cause your search engine rankings to drop.
Many practices take a short-sighted approach when selecting their Web
vendor, thinking only about the need for an “attractive” Web site. Too often,
their due diligence consists of looking at the vendor’s design portfolio and
concluding, “Well, their designs look OK.” Allow yourself to think past the
creation of your Web site and consider your long-term maintenance and ongoing online marketing needs.
Web firms may provide a full range of services or they may specialize
in graphic design, information architecture, Web development, copywriting,
programming, or promotion. The number of people employed by your vendor is less important than their demonstrated ability to produce attractive
Web designs, author clinically accurate and optimized text, achieve and sustain top search engine rankings, lead local Web marketing and email marketing
campaigns, guide social media strategy, manage paid placements, and address
legal and regulatory compliance issues with whatever staff they have. If you are
considering a small firm, ensure that all of these skills are represented among
their staff. Ask larger firms to describe their departmental structure and the
expertise present in their organization.
A common mistake is to hire separate companies for Web site design and
search engine optimization. This approach is costly and inefficient. You are
better served to finding a single vendor who offers all of the skills required to
design, build, and optimize your site. While these are two different disciplines,
they should be employed concurrently at the time you create your site to
ensure that your site will satisfy the expectations of your visitors and the search
engines from the very first day.
Since you will rely on your Web vendor for regular site updates, the vendor
should be accessible and responsive. You might consider calling their support
line before making your decision to uncover how hard it is to connect with
an actual human when you need help.
Your due diligence should include, at the very least, a review of their past
designs, a request for samples of clinical copywriting for your consideration,
examples of their top-ranked Web sites, and discussions with at least three
clients who have worked with the vendor for no less than one year. You should
ask those references how their initial Web development was handled, especially
whether it was delivered on time and on budget. Inquire also about ongoing
maintenance and the success of their marketing direction. Determine whether

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the vendor has expertise in medical marketing or if they will need to learn about
your profession as they go.
Do not feel the need to limit your reference check to the few names
supplied by the vendor. You can “secret shop” a vendor by selecting clients
depicted in their online portfolio or searching Google for the vendor’s name.
Often, such searches will reveal more of their client Web site addresses so that
you can call for a candid reference.
Finally, request and carefully review a copy of their contract before you
authorize the project. Many Web vendors structure their contracts so that
they, not you, own your Web site. Choose a vendor that grants you full rights
to your Web site and the creative files that were used in its construction.
Even after you have chosen a vendor, you need to educate yourself on the
basics of web marketing so that you can “speak the language” and understand
your vendor’s tactics and recommendations. One of the key principles of Web
marketing is the concept of search engine optimization (SEO).

Understand the Impact of “Optimization”
Roughly 80 percent of American Internet users turn to the Web for healthcare
information.1 Most start at one of the top three search engines (Google,
Yahoo, or Bling), and few searchers will look beyond the first or second page
of results. The math is simple — potential patients are online, and top search
engine rankings are the best way to reach them.
So how do you get listed in the top of the natural search engine results,
those 10 or so results that occupy the majority of the page? Quite simply, you
earn your way to the top.
Each of the top three search engines is a publicly traded company. Each
has a customer: the searcher. Their market valuations are based largely upon
advertising revenues; those revenues are tied to their market share (the number
of searchers loyal to their engine); and that market share is held by delivering
great search results to their customer, i.e., the searcher.
The Web site for your practice is simply a means to the search engines’
end. You provide content — text, photos, and videos — that may or may
not interest searchers. To the extent that you provide content which a search
engine believes will satisfy their customers, you might earn a top ranking. The
process of improving your site with the goal of improving your ranking is
called search engine optimization (SEO).
SEO considers how search engines work and what people type when they
search. There are many perspectives on SEO and many different approaches

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as well. Most SEO tactics will address one of three key factors — keywords,
content, and links.
Keywords are perhaps the easiest factor to understand and the most often
overlooked. Keyword research, described later in this chapter, allows you to
identify exactly what your potential patients type when searching for your services. The optimization process involves thoughtfully integrating these keywords into your site’s content.
Some people would do almost anything for top rankings. This includes
stuffing keywords into poorly written pages. Bad pages created solely to earn
rankings — pages that searchers find useless — are a big problem for the
search engines. To weed out bad sites, search engines today will do the virtual
equivalent of a reference check by evaluating the links coming to the site from
other Web sites. The idea is simple: people link to good sites and do not link
to bad ones. The more links that are pointed at your site from related sites
which are in good standing with the search engines, the more this signals to
the search engines that your site may be worthy of a high ranking.
If you are reaching the conclusion that SEO is complicated and timeconsuming, you are beginning to get the idea. Many surgeons who are discouraged by the effort required to earn top rankings may be inclined to find
shortcuts. Let them be warned: the top three search engines have all devoted
millions of dollars to blocking efforts to manipulate their results. They have
gone so far as to post very public warnings about the “dos” and “don’ts” of
SEO. Just visit your favorite engine and search for “Web master guidelines”.
While all of the top search engines post warnings that caution against posting
duplicate content and creating pages with only the search engines in mind,
there are lesser known restrictions that can impact how your site will rank.
For instance, many search engines are concerned with making the Internet
a safe place for young people to search. Did you know that displaying nudity
could get your site classified as adult content and tossed in the same bucket as
pornographic pages? Web vendors specializing in cosmetic surgery will help
you wrap warnings around photos that display nudity to prevent the adult
content stigma that could hurt how you rank.
A good SEO effort will take time to identify the keywords that matter most
to your practice — keywords that consider not just the services you offer, but
also all of the geographic markets you hope to reach. These keywords will
shape the map of your site, as at least one page should be dedicated to each of
your most important keyword phrases. Those pages are then populated with
original, well-written content that answers questions and solves problems,
while allowing for regular content updates to demonstrate your commitment

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to your topic. Your SEO effort will also seek to persistently secure new inbound
links from related sites.
SEO is a way to help the search engines do their job of connecting people
with the information they need. After all, your audience is not a piece of
automated search software from Google or Yahoo, but a living and breathing
human on the other end of a computer screen and keyboard. Always keep this
potential patient in mind when engaging in SEO tactics.

Create a Site to Satisfy Patients and Grow
Your Practice
When taking your Web site from a vision to a reality, the needs and desires
of your potential patients should remain at the forefront of all considerations.
Along with your Web vendor, you should be thinking about things like accessibility, ease of use, and overall appeal. This section gives an overview of the
steps that you or your Web vendor should take when constructing your site.

Research your keyword phrases
The majority of people find Web sites by entering a keyword phrase in a search
engine. At their most basic level of operation, search engines find pages that
contain, or relate to, that keyword phrase. Pick the wrong keywords or ignore
keyword selection altogether, and your site will not be found by prospective
patients. The first step in any Web development project should be keyword
phrase research.
The goal of this research is to identify the exact phrases used by real
men and women who are actively searching for your services. This is easier than it sounds. The process consists of just two steps: brainstorming and
prioritization.
During brainstorming, your goal is to catalog every possible phrase that
might be employed by a prospect. To do this, create two lists. The first will
contain words and phrases that describe the conditions you treat and the
services you offer. The list might include anything from “abdominoplasty” to
“wrinkles”. Be sure to include common names, scientific names, and slang.
Your second list will include all of the regions where you wish to be found
and might include cities, counties, regional nicknames, and entire states. To
conclude your brainstorm, combine every service term from the first list with
every regional term from the second. If you had 10 terms on each list, the
resulting list would contain 100 candidate keyword phrases.

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Ranking well for any one keyword is a complex and potentially costly
process. Choose the wrong keywords, and you will fail to connect with the
bulk of patients looking for your services online. You need to prioritize the
candidate keywords, focusing on the most popular phrases and tossing out
the ones nobody uses. This can only be accomplished by employing special keyword research software. At the time of writing, the two most popular keyword analysis tools to data are available at www.wordtracker.com
and www.keyworddiscovery.com. A free (and less practical) tool is offered
by Google. All of these will help you research the relative search volume for
each candidate phrase, identify the most common word order (procedural
term or regional term first), and uncover related phrases.
Undoubtedly you will find that the majority of your keyword candidates
are almost never used by real people. A small number of the phrases will
account for most of the search activity in your market.
Before you proceed with planning your site, you will need to select a finite
number of those phrases to target. How do you choose them? Most practices
will benefit from selecting the phrases searched most often. You might also
wish to include a few key phrases with lower search volumes that appear to be
highly relevant to your practice goals. By focusing on 10 to 50 phrases, you
are less likely to dilute your online marketing efforts and more likely to see
real gains in relevant search engine rankings.

Select your domain name
A domain name is the unique name that identifies a Web site, such as www.
google.com. Domain names are acquired from registrars — companies like
Network Solutions(www.networksolutions.com) or Go Daddy (www.godaddy.
com) — that serve as official record keepers for who owns a name and where
the associated site can be found on the Web. The domain name you choose
should be easy to say and difficult to misspell, and should reflect the nature of
your practice. Remember that your domain name will appear in advertisements
offline and will be spoken by your staff when they are on the phone.
In a perfect world, you would choose a domain name that happens to
contain one of your most often-searched keyword phrases. The presence of
a keyword phrase in your domain name may have a small beneficial effect on
related search rankings, but not so much of a benefit that you should go out
of your way to choose a domain name only for this reason.
It is common for a medical practice to rely upon their Web vendor to
register their domain name. Beware! Many Web vendors, intending no malice,
will register your domain in their own name or within their domain account,

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effectively claiming ownership. If your relationship ever goes bad, you will
want access to that domain name when they may be least inclined to turn it
over. From the very beginning, direct your Web vendor to register the domain
in the name of your business entity and in an account that you can control. You
should be given the registrar’s Web address, a log-in name, and a password.
Once you have logged in, review the registration data carefully to ensure it
accurately names you as the owner.

Specify the architecture and the function
You can increase the likelihood of a smooth and successful Web site project by
carefully mapping out the pages of your site before construction begins. You
should create a site map, which is a document you can think of as the blueprint
for your new site, to protect yourself and to ensure that you and your chosen
vendor share the same understanding of your project’s scope of work.
Unfortunately, many doctors will call a Web marketing vendor and say, “I
need a Web site for my plastic surgery practice. How much will that be?” The
vendor, eager for the business, makes up a number, and away they go. As they
figure things out along the way, the doctor’s expectations will grow while the
vendor will try to restrict the project before every last penny of profit dissolves.
In order for a Web marketing vendor to estimate a project properly, they
will need to know the number and nature of pages in your site, how the site
will function, and what special features you require. A good vendor will help
you clarify all of these points before they provide an estimate.
Your site’s architecture — its organization — should address the most common needs of your prospects and patients. This is also the time to revisit your
list of documented objectives. Prospects want detailed procedure information, before- and after-surgery photos, an introduction to the surgeon(s) and
the practice, payment information, and clear contact instructions. Existing
patients need easy access to driving directions, forms, and practice news.
Create a map of your new site that will satisfy patient expectations and your
business objectives.
Along with your site map, you will want to make notes about what you
expect the site to do. Does it need to collect consultation requests? Schedule
appointments? Gather newsletter subscriptions? Sell skincare products?
Support a blog? Anything that goes beyond text and pictures will involve
custom programming, and should be carefully documented and disclosed to
your Web vendor before they estimate the cost of your project.
Your site map should also allow for growth. Any change in your practice
should be reflected online. New services will mean new pages. Changes in

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your training or certification will warrant copy edits and graphical promotion.
Search engines like sites that are regularly updated; plan now to make adding
new content easy.
It is important to note that a site map does not address the aesthetics
of your site. The site map, whether a simple outline or block diagram, only
lays out the structure of your pages. For your first Web site project, the KISS
principle (Keep It Simple, Stupid) definitely applies. All you really need to get
a foot in the door of the Web marketing world is a clean, appealing design;
well-written text; a library of representative before-and-after photos; and a
contact form. While many enhancements beyond these features exist and can
create a better user experience, consider these add-ons as luxury items until
your Web site has become a profit center for your practice.

Know what you will need to contribute
You cannot profit from your Web site until it is released to the public. The
sooner your site is completed and you begin promoting that site, the sooner
you can recover your investment in its construction. Ask your vendor up front
what role you will play during the development. At the very least, you will
need to present your vendor with background information and photos from
the practice; then, you will need to review the site design and each page of
text. If you are to be tasked with copywriting, allow a full four hours per page
to author well-composed, clinically accurate content.
Expedient development will only happen when you and your development
team share the same understanding of who is responsible for each piece of the
development. Work with your vendor to set deadlines that both of you can
meet, and hold yourself to delivering on deadline. After all, any delays you
introduce into the process will cost you in money and missed opportunities.

Design and build
You want a site design that reflects the image of your practice, connects with
your patient audience, and encourages interested prospects to choose you for a
consultation. You need a site constructed using coding techniques that enable
search engines to easily find and catalog every page of your site.
To successfully capture the essence of your practice, your Web vendor will
need insight and inspiration. Prepare a brief that describes what is unique
about you and your practice, your approach to patient care, and your perfect
patient relationship. Gather photos of the facility and staff, samples of your

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print collateral (brochures, etc.), and samples of your advertising. Choose
three to five sites, preferably from outside both your market and the plastic
surgery industry, that exemplify a design style you like. You might look at
sites in fashion, jewelry design, and high-end travel for chic inspiration; or
examine sites for hospitals, universities, and banks if you are after something
a little more professional.
The development process will vary greatly from one vendor to the next. It
will also depend upon the scope of your project. For example, if you purchase
a pre-made template, your project will follow a very different course than if
you have a custom design.
There are, however, some common milestones in almost every Web site
development project. You can expect to be presented with one or more rough
design compositions. You may be asked to select one before engaging in several
rounds of design refinement. Once a design is finalized, the development team
will begin building a shell of the site while copywriters (yours or your vendor’s)
will create or customize your text.
Construction methods matter. Many of the most engaging Web page elements can impede search engine rankings. Certain kinds of drop-down menus
obscure the addresses of your pages deep in programming code. Many search
engines cannot see the text and links that are locked within Flash animation.
Remind your Web vendor that you wish to impress both potential patients and
the search engines. Ask them to point out the places on your site where search
engines might get stuck and where they have implemented the workarounds
to ensure that search engines can easily access every page.

Test and release
Before you release your new Web site to the public, you will want to perform
an aggressive quality review. Do not assume that your Web developer is dotting
the “i’s” and crossing the “t’s”. Remember that it is your medical license on
the line. Here are just a few of the areas to keep a close eye on:
• Images and appearance — Does the site reflect you and your practice? Have
you verified that you have rights to use all the images in your design?
• Navigation and usability — Is it easy to get from one page in the site to the
next? Can a visitor easily find the main sections in your site? Do you offer
multiple ways to navigate the site, such as menus, breadcrumb navigation
(which helps the user identify where on a Web site a Web page is), site
search, and a map?

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• Contact and calls to action — Is your contact information prominently
displayed in plain text on every page? Do you ask for and encourage contact
or consultation requests?
• Composition and clinical accuracy — Is your content grammatically correct
and free of spelling errors? Is all procedural content clinically accurate and
free of hyperbole?
• Consistency and legibility — Are the working Web pages consistent with
the design compositions? Can the text be read easily, even by people with
vision impairments?
• Forms and functionality — Do your custom systems and forms function?
Do you know where email from your site is sent, and have you reviewed
any automated response text?
• Legal issues and compliance — Does the site comply with regulations
set by your state’s medical board, your certifying boards, and the societies and organizations to which you belong? Does it observe Health
Insurance Portability and Accountability Act (HIPAA) and other federal
privacy requirements? The box below offers more advice on this matter.
Marketing Mistakes to Avoid
Here are just a few best practices when it comes to complying with advertising regulations and restrictions. Of course, for a complete assessment of the
laws and regulations that apply to your practice, be sure to talk with legal
counsel.
Avoid the following:
Engaging in false, fraudulent, or misleading advertising.
Misstating your board certification(s).
Making unsubstantiated claims about a product or service you offer.
Using hyperbole (for instance, saying, “No hand surgeon is better than
Dr. Jones.”).
• Using model images or stock photography without indicating that the
photos are not of actual patients.
• Displaying patient photos without prior written consent.





• Performance — Does the site appear the same in all major Web browsers?
Does it load quickly?
This overview of the site planning, design, and building process should
help you hit the ground running when it is time to work with your Web

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vendor. Once you have launched your new Web site, you are ready to begin
the next phase of Web marketing — using your site effectively to earn new
patient consultations.

Run Your Site Like a Business
Your Web site will not contribute to the success of your practice without the
support of your staff. The people who search for and find your site have expectations similar to, if not greater than, those patients referred to your office
offline. You must plan to update your site regularly, define clear operating
standards, train your staff to provide exceptional service to online inquiries,
and actively measure your investment return.
At the bare minimum, you must designate someone from your staff to serve
two key roles: Web site management and Web customer service. The Web site
manager keeps an eye on the site and is your primary point of contact with
your Web vendors. The person servicing Web customers provides a thoughtful
and timely response to your online inquiries. While these two roles could be
filled by the same person in a small practice (such as the office manager or a
receptionist), for a practice in a major metropolitan area, a successful Web site
could require several people just to address inbound emails.

Web site management
Your Web site must educate existing patients and attract new ones. To be
successful in either case, your site must present patients with content that is
both accurate and current. Search the Internet today and you will still find
plastic surgeons whose sites claim that saline is the only breast implant option
approved by the Food and Drug Administration (FDA). You will find sites
promoting seminars that happened years in the past, special offers that have
expired, and devices like Contour Threads that are no longer distributed. What
do these dated sites say to visitors? Old and outdated content will suggest to
some patients that you have poor attention to detail. Others may conclude
that you are no longer active in your practice or that you are out of touch
with your industry. Whatever any one patient concludes, there is no shedding
a positive light on a dated site.
Both searchers and the search engines value sites that are regularly updated
with new information, breaking news, and special offers. Designate one member of your team to routinely update your site and coordinate relations with
your Web vendors. This is by no means a full-time job. At most, it should

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require a few hours each week and a day or two each quarter. When defining
this Web site management role, require one person to:
• Advocate for the site and your online audience. Test team members to
ensure they know your Web address and how patients will benefit from
visiting the site.
• Review each page of the site once each quarter to make sure it is current
and accurate. Remove or revise dated information.
• Integrate references to new training, certifications, publications, or media
appearances by clinical staff.
• Check (1) the confirmation pages visitors see after filling out forms and (2)
the auto-responder text that is sent via email to ensure that the information
remains accurate.
• Ensure that any new procedures are represented in your online menu of services and that any new approaches to traditional procedures are described.
• Monitor online calendars and periodic news, on a monthly basis, to ensure
that upcoming events are promoted and that time-sensitive publications are
not allowed to get too stale. Plan early to promote news and events online
or through email.
• Augment your photo gallery, patient testimonials, and real patient stories
with fresh content as often as possible.
• Interview front office staff to uncover ways that the site can be used to help
improve workflow at the practice. This might include publishing answers
to the most frequent questions or offering new information for download.
• Collect Web site update requests from other staff members and provide
uniform direction to Web vendors.
• Gather and analyze Web marketing performance reports, including keyword
rankings, traffic trends, and lead capture counts; and convey these statistics
to the practice leader.
Your designated Web site manager does not necessarily need to understand the
technical details of how particular updates or changes will take place, but does
need to understand how to communicate with your Web marketing vendor
effectively.

Web customer service
Professional and timely communication with patients is very important. A
prospective patient may spend months researching their procedure online,
visiting your site on several occasions during that period. But the moment

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they decide to reach out and email your office or request a consultation, you
can bet that they expect prompt and courteous attention.
Numerous studies of online customer expectations all conclude the same
thing: the faster you address the inquiring person’s concern, the more you
are likely to sell that person a product or service. How fast? We are talking
minutes, not hours or days.
If you already have a site and are like most practices today, you respond
to your email as time allows … and something more pressing always seems to
get in the way. Do not blame email as a medium and do not be surprised if
you do not earn consultations from email inquiries when you write back days
or weeks after the email arrives.
In addition to designating a member of your team to take the lead in
servicing your online inquiries, you should define office policies about how
email is handled. Specifically, that policy should:
• Encourage your team to get off email as soon as possible and get on the
phone.
• Set the expectation that email inquiries are as important as phone calls and
require the fastest and most complete response possible. Keep your email
program open and set to automatically check email at least every 5 minutes.
• Mandate professional language and presentation. Direct your staff to
include a salutation, complete sentences, proper spelling and grammar, and
complete practice contact information in every message.
• Establish guidelines for the types of questions that may and may not be
addressed in email.
• Guide staff to use time-saving tools, like signature files, templates, and autoresponders, to accelerate email handling.
• Inform staff that all email is stored to protect the practice and the patient.
HIPAA-covered practices should consult their HIPAA officer or advisor
on mandatory HIPAA disclosures and privacy statements as well as legal
requirements for the storage of electronic communications.
How do you measure the success of your Web customer service agents?
Practices using management software should consider entering all Web
inquiries into their software and saving detailed notes about the referral source
and ultimate outcome of every inquiry. It is easy for someone to appear successful if they promptly delete all of the inquiries that do not immediately
come in for consultation. You can also review their sent and deleted email
folders to gauge the quality and timeliness of their replies. Running your Web

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site as if it were a separate business will help you grow your actual business
(your practice).

Engage in Diversified Online Promotion
You should be familiar with the notion of diversification in offline advertising. Radio advertisements can increase awareness of a new procedure or your
name and your practice, while advertising in the Yellow Pages can, you hope,
help a prospective patient find you when hunting for a surgeon. There are
just as many (if not more) ways to connect with potential patients online.
Diversifying your online advertising will help you reach different types of
patients at different points in their path toward a procedure.
Before you consider diversifying your online promotion, make sure that
you have taken the time to develop an attractive, well-written, informative
Web site that reflects the image of your practice and invites visitors to become
patients. There is little reason to invest in driving more potential patients to
a site that is ill equipped to provide them with the resources they need once
they arrive.
Here is more information on several of the most popular online marketing
tactics to help steer visitors to your site.

Email marketing
Anyone with an email address has experienced the good, and the bad, of
email marketing. Email marketing is a fast, interactive, and inexpensive way
to push information to, and gather feedback from, men and women familiar
with your practice. However, several federal laws restrict how you can build
your list of email recipients and govern what content can appear in your messages. Software designed to limit the unwanted email we all receive makes
getting your message delivered a challenge. While email can be an extremely
cost-effective promotional tool, running a legal and profitable campaign does
require some expertise.

Local marketing
The World Wide Web is going local. More and more people are recycling their
phone books in favor of finding local resources online. It is no wonder this
trend is taking off, with choices like map search at the most popular search

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engines, city guide sites, or sites that specialize in gathering consumer reviews
of local businesses.
Jumping on local online marketing is a good idea for all the same reasons
that practices once relied on the Yellow Pages. By now your local market
probably has several different phone books all soliciting you for a listing, but
there are dozens of local marketing opportunities online, so be ready to spend
even more time carefully assessing which ones will work best for you.

Directory advertising
Several cosmetic surgery Web sites allow practices to pay to appear in their
regional directories. These directory sites offer information about procedures
and industry news to attract visitors, who may then choose to learn more about
practices featured in their directory. A directory is a nice way to supplement
your own search engine marketing and attract more qualified visitors back to
your own site, but it is not a substitute or replacement for your own site.
Many directory sites employ aggressive sales tactics and use fear to motivate
doctors to subscribe. While any marketing investment comes with risk, you
can objectively evaluate certain details to inform your decision. Before you
invest with a directory site, learn where they get their visitors and how many
potential patients already visit their site from your local market. Explore any
limits they place on the number of practices they will feature in your market
and how you will be able to measure their performance when the question of
renewing the investment arises.

Pay per click
Many of the most popular search engines allow you to place targeted advertisements on their sites and pay only when your advertisement is clicked. Each
site uses a different methodology to determine how high your advertisement
will appear on the page and how much you will pay for a click. All of these sites
allow you to carefully target your advertisements so that they will only be seen
by people who are looking for your services in your market. It is also easy to
set daily and monthly budgets so that you are not bankrupted by click costs.
Creating a pay-per-click (PPC) campaign is easy enough for most novice
computer users to tackle in a weekend. But getting the largest number of clicks
for the lowest price takes a lot of learning and constant campaign refinement.
Click fraud, which occurs when a person or a piece of software clicks advertisements to generate the per-click charge without an interest in the advertising
content, is an increasing risk that requires active monitoring.

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Many surgeons fall prey to “ego bidding”, or constantly bidding to the
top position, regardless of the cost or investment return. PPC, like all online
advertising efforts, should be run with profit as a central objective.

Blogs
Short for “Web log”, a blog is little more than a virtual diary or online column.
Each blog entry, called a “post”, can be categorized, labeled, shared, and
commented upon. Special software, free from sites like wordpress.org or
www.blogger.com, makes it easy for just about anyone to create a blog in
minutes.
While starting a blog is fast and easy, successful blogging takes a commitment of time and a penchant for writing. Before starting a blog, it is wise
to decide whether your blog will be integrated into your Web site or if it will
reside at a separate address. You will also need to define the focus of your blog,
set a goal for how frequently you will post entries, and develop a promotional
strategy to attract readers.
Blogs can benefit your practice in several ways, but there are also some risks.
You might employ a blog to publish news from your practice and the industry,
offer advice to patients, or share your opinions. If your blog is optimized, its
individual posts could earn search engine rankings and draw attention to your
practice. In addition, links from your blog pages to your main site may help
improve the ranking of your site. The quality or substance of your posts may
earn the attention or respect of potential patients. But your posts are just
as likely to earn criticism or humorous comments, so think carefully before
you elect to allow public commentary on your blog (a setting in the blog
software).
If you find you lack the time to maintain your own blog, you can still
participate in the “blogosphere” by actively commenting on posts related to
your interests or your practice found on other people’s blogs.

Social media
Social media continues to receive an increasing amount of attention. As of
the date of this publication, popular social media sites include Facebook and
Twitter, as well as video sites like YouTube and social forums like RealSelf.
Social media marketing involves developing an online following and then
actively communicating with this audience through platforms that make it
easy to start a conversation, share information and post multimedia.

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While a solid business case for heavy investment in social media has yet to be
made in the plastic surgery context, it is almost certain that social media marketing will play an instrumental role in the success of plastic surgery practices
in the near future. Surgeons must be smart about how they approach social
media, especially since it is still in its relative infancy. For instance, social media
accounts are generally free to create, but a practice can incur a fair amount
of expenses and devote a significant amount of time related to configuring
the account, cultivating a following of “fans”, writing original and engaging posts, and responding to both positive and negative comments received.
Another word of caution: Maintaining a consistent message and communicating quickly (as social media participants expect) requires diligence and active
involvement online. Practices that hope to have success in social media with
only a half-hearted attempt are finding that inconsistent responses or poorlycrafted messaging often disappoints the expectations of participants. These
participants are not looking to be “marketed to”, but instead want to build
more sincere and personal connections online.
One of the first things you should do if you are considering entering the
social media space is to claim your practice name in the most popular platforms,
such as Facebook and Twitter. While it is best to have an active presence on
these platforms, having no presence at all could cause your practice to fall
“off the map” in the minds of potential patients using these sites. Take the
time to make your own assessment of the value social media marketing can
provide you, but be sure to properly account for all of the benefits, including
building goodwill with patients and cultivating long-term relationships, which
on many levels are highly intangible yet play a critical role in the success of
your practice.

Demand results, track everything, and stay involved
One of the fantastic advantages of online marketing is that nearly everything
can be tracked. You can easily report on search engine rankings, the number of visitors coming through your site, and the number of inquiries flowing
through your email and online forms. Trackable phone numbers can be added
to count calls originating from the Web, and special software can automatically reveal the referral source for virtually every lead and track their progress
through your site.
Although these services are available to every practice, few practices will
choose to embrace the full potential of online marketing (or take the time
to carefully hire a skilled and proven Web vendor). But there is no reason to

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be uncertain about the return on your Web marketing dollars. While it will
take a full nine months for most new Web sites to earn top rankings, if after
a year you do not hold a significant ranking in your local market, something
is wrong. It is true that no one can just drop your site in the first position on
Google for a particular search phrase, but your Web marketing should be the
single largest marketing source of new patient inquiries (excluding word of
mouth) within 12 months.
It is important that you or your designated Web site manager stay involved.
Ask for regular updates on your rankings and your site performance metrics.
Respond quickly when problems are uncovered and look for opportunities to
expand your reach online when times are good.

Putting It All Together
Modern surgical practices do not have the luxury of deciding whether or
not to get on the Web. That ship has sailed, and the reality is that your only
choice now is how you are going to represent your practice online. This chapter
has provided the nuts and bolts of constructing a Web site from scratch and
implementing the tactics that will help that site get noticed.
As should be abundantly clear, online marketing is fraught with a number
of potential pitfalls, but at the same time it represents an enormous opportunity to connect with new patients and grow your practice. When done right,
online marketing is an asset you can bank on. Spend time finding a vendorpartner you can trust to do a great job for you while your site is being built and
also “after the sale”, as your ongoing promotion brings in a healthy stream of
Web-based leads.
Most of all, remember that you cannot “set it and forget it” if you want
your Web site to be a true success. Stay involved in your practice’s online marketing efforts, and track the return on your online marketing dollars. There
is plenty of time and plenty of opportunities to get up to speed on Web marketing. Take advantage now to put your practice in the best possible position
for the ever-expanding number of patients doing their research online.

Reference
1. http://pewresearch.org/pubs/265/seeking-health-online/.

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Optimizing Your Practice
Marie B. V. Olesen

A competitive world has two possibilities. You can lose. Or, if you
want to win, you can change.
Lester C. Thurow

In this chapter, you will learn about:






Using business techniques to better manage your practice;
Understanding the similarities between medicine and business;
Segmenting your patient relationships to improve practice performance;
Using metrics and best practices to improve revenue outcomes; and
Optimizing your revenue using key performance concepts.

L

ike many surgeons, you may operate the business side of your practice with
the belief that what you do not know cannot hurt you. Unfortunately,
nothing is further from the truth. While business issues and revenue management may not be comfortable for you, avoiding business issues is not in your
long-term interest either.
You have been through college, medical school, two residencies, and perhaps a fellowship or two. The problem, if there is one, lies in the curriculum
of your surgical training. Your professors taught you what they knew: how
to be a surgeon. They could not prepare you to run a multi-million dollar
business.
Unfortunately, these missing entrepreneurial skills can have a significant
impact on your financial security. If you are in private practice, you must be able
to produce revenue and manage your practice to drive the bottom line. This
is true in group or multi-specialty settings as well. The better you understand
the revenue side of your practice, the more you can influence your personal
income.

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Looking at the Similarities Between
Medicine and Business
There is a prevailing myth that doctors are not good at business. I do not
agree. Based on my direct experience with hundreds of plastic surgeons, you
can flourish in business as well as in medicine. Your profession is both processoriented and data-based. By learning how to use the business equivalents of
these two principles, you can more effectively control your business outcomes
and create a more predictable and safe future.
• Process-oriented — When you go to the operating room (OR), you operate
using proven surgical processes that are known to create predictable clinical
outcomes. Sometimes, small changes in operative techniques can significantly improve surgical results. A corresponding process-oriented approach
works just as well on the business side of your practice. Using proven business processes for patient care and customer relationship management creates more predictable revenue.
• Data-based — You use normative data and medical algorithms to make
decisions about your patients. For example, you compare your patients’
laboratory results against known norms to determine if a patient is healthy
enough for surgery. The process in business is similar. To manage your
practice more effectively, you need to understand how to use the business
equivalents: metrics and benchmarking.

Getting from Here to There
Virtually all advances in surgery occur because someone has figured out how
to do something differently for a better or quicker result. Improvements
in surgery frequently arise from questioning current techniques or adopting new technologies. The flow diagram in Fig. 1 depicts that decision
process.
To improve a surgical procedure or a business process, every step in the
process must be isolated and synthesized into the series of “yes/no” decisions
involved. Every time you come to a decision point, there are only so many
options, and the options change as you move from decision point to decision
point.
When my husband took his first residency at Columbia Presbyterian
Medical Center in the early 1960s, he told me that cautery was not safe to use

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Fig. 1.

171

Decisions in medicine.

because so many of the anesthetic gases were explosive. Once non-explosive
gases became available, the use of cautery became widely accepted and
operating times dropped significantly.
Clearly, there are business equivalents to this example. Someone notices
that a clinical or business outcome is not ideal and starts thinking about it. In
our own field, the business skills and the business processes needed for reconstructive or general medicine are different than those needed in an elective
or cosmetic environment. New approaches are developed and adopted over
time. To determine whether a proposed change works, it is subjected to an
evaluation process containing the following sequential steps:
• Test — Set a specific period for evaluating new concepts (typically two to
four months or longer, depending on the strategy being evaluated).
• Track — Measure results of your changes. Are your practice metrics improving as you anticipated?
• Refine — Do you have any other ideas to test as a result of the changes you
have made? If so, test and track those as well.
• Repeat — Once you are consistently achieving your goal, then you continue
until your data show a reason to re-evaluate.
You can document decisions using a flow chart. Generally, a series of
“yes/no” questions leads to a conclusion. The medical flow chart (Fig. 1)
can be used to evaluate core business changes as well, as shown in Fig. 2.
• Do you have the same degree of control over the business side of your
practice as the surgical portion?

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Fig. 2.

Simple business decision flow chart.

• If your answer is “yes”, then you are satisfied and can stay your current
course.
• If your answer is “no”, then implement new business processes to achieve
your goals.
Continue using the Test-Track-Refine-Repeat approach to determine the
effectiveness of new concepts.
The two flow charts (Figs. 1 and 2) are very simple. An actual surgical
or business process flow chart is much more complex, involving many more
decisions and possible outcomes.
When you perform surgery or when I work on business issues, we make
decisions constantly. Often, neither the surgeon nor the manager can articulate
each decision point because many are at the intuitive level.
• For example, if you are dissecting and encounter a bleeder, you make the
decision to stop and control the bleeder before continuing. You do not
cancel the operation because encountering bleeders is a known problem
with known solutions. Instead, you fix the problem that is impeding the
successful outcome of the procedure.
• Likewise, on the business side, if I am trying to get the maximum number of
callers to arrive at their consults, I do not stop my entire patient acquisition
process because we are encountering no-shows. I try to fix the root causes
of the no-show problem with known business solutions. Then, I can more
predictably increase the number of callers coming in for their consult and
ultimately increase surgical volumes.

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173

Thinking “Retail” to Better Meet
Patient Needs
In a speech given to the American Society of Plastic Surgeons (ASPS) in the
mid-1990s, I quoted statistics about Nordstrom’s outstanding success. In an
industry where the average revenue per square foot was US$1.50, Nordstrom
earned US$3.90! Nordstrom outperformed its competitors by almost 3:1!
Nordstrom transformed the fashion retail industry with three key changes, all
of which are applicable to plastic surgery:
• Facility — It upgraded its stores and made shopping a more upscale
experience.
• Staff — It introduced the first commission structure in the industry and
transformed its employees into entrepreneurial partners.
• Customer relationship — It took the long view and focused on long-term
customer relationships versus short-term sales. It empowered its employees
to implement this strategy, especially as it related to returns, and thus created
an industry-transforming customer experience and made shopping more
enjoyable.
Some innovative plastic surgical practices implemented savvy business
strategies in the early 1990s as well. They recognized that their patient experience was also a customer experience. They redefined their approach and
implemented the following changes:
• Facility — They upgraded their offices to a more residential appearance.
• Staff — They recognized the importance of a motivated team.
• Patient relationship — They introduced programs to recognize patient
retention and stimulate referrals.
By understanding their patients/customers better than did their colleagues, these practices enjoyed substantial revenue growth. Like Nordstrom,
they reset the competitive bar.

Getting the Data You Need to Make
Things Better
We need to talk about patients as “customers”, surgery scheduling as a
“buying” decision, and our communications to prospective patients as a

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“selling” process. When you understand your patients’ buying process, you
can use that knowledge to create a more successful selling process.
The case study example in the box below illustrates the importance of
segmenting the customer relationship and collecting data to make decisions.
Dr. X is unhappy with his cosmetic surgical volume. His earnings are well
below his peers’ and he wants to be busier, but he does not know how. Dr.
X has the following data available:
• Number of consults seen; and
• Number of cases completed.
Using this information, he has computed the percentage of consults that
completed surgery. Unfortunately, this is not enough information to suggest
a solution.
• If the percentage of patients who completed surgery is a high percentage
of patients seen in consult, he might assume that his low surgical volume
is not the result of handling consults poorly.
• Conversely, if the percentage of consult patients completing surgery is
low, he does not know what to do about it.
As you can see, even knowing the percentage of consult patients completing surgery is not enough information to effect change. Neither answer deals
with his core issue: he wants to do more surgery. Because he does not know
the issues creating the undesirable result, he cannot intervene to change
the outcome. He has some data, but not all the data necessary to effect
change.
A lack of data is a common problem in our practices. We make decisions
based on wrong or incomplete data, which lead us to the wrong suppositions
or conclusions.

Segmenting Customer Relationships
If you are like Dr. X, and you want to improve the performance and revenue
of your practice, you need to understand the underlying customer relationship
process. This field of business is known as customer relationship management
(CRM). It involves tracking the series of decisions customers make as they
interact with a business, and it ensures that the business has appropriate followup contact with its customers.

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175

Your potential patients move through a series of “yes/no” decisions as they
consider your practice. We must recognize these decision points and track data
relating to them.

Understanding the customer relationship life cycle
The segments of customer relationships are plotted using a life cycle approach.
Prospective buyers (be they patients or retail customers) move through a series
of decision points, which fall into pre-purchase, purchase, and post-purchase
categories. Figure 3 shows the customer relationship life cycle (CRL).
In Fig. 4, the stages in a medical practice are labeled to delineate a patient
relationship life cycle (PRL).
Both Figs. 3 and 4 track consumer movement through a sequential series
of stages, starting with the process of buying and ultimately moving to
the process of retention. The patient’s movement along the life cycle indicates a higher level of commitment and interest. Metrics measure movement
between stages, and benchmarks help you evaluate business performance at
each step.

Fig. 3.

Customer relationship life cycle.

Source: Touchpoint Metrics.

Fig. 4.

Patient relationship life cycle. Adapted from Touchpoint Metrics.

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You may find yourself asking, “Why does all this matter?” The case study
below should answer this question.
Dr. Y had a very successful augmentation-based practice, but he recognized that his practice was not optimizing its opportunities. He felt, given
his new patient activity, that his surgical volume should be higher, but
he lacked the data to validate his instincts and to diagnose his practice
performance.
1. We implemented a system that enabled the practice to gather data at each
point in the patient decision process.
2. Evaluating the new data, we searched for opportunities for improvement.
3. Analyzing the data by stages, we found:
• Inquiry had no problem, as virtually all callers made an appointment.
• Appointment had significant issues: 40 percent of patients making an
appointment failed to arrive at the consult, either by calling to cancel
or by failing to appear for the consult.
• Consultation showed high conversion rates of consult patients, but
not enough patients were being seen to keep his schedule full.
• Surgery Scheduled had no problem, as the only cancellations were
medically necessary.
4. Implementation — we worked with the practice to increase the number
of patients arriving for their consults as a primary goal and, secondarily,
to increase scheduling rates by those who did arrive.
• We implemented telephone training to enhance call quality.
• We improved the quality of materials sent to prospective patients.
• We updated the traditional patient-day schedule to reflect the surgeon’s
goals and to better meet patient scheduling needs.
• We provided training to the consult team to enhance scheduling rates.
This example shows how changes in business processes and staff training can make a big difference. By increasing the number of patients who
move forward along the PRL, we can stimulate significant changes in
revenue.
In this example, Dr. Y was performing surgery on 30 percent of the callers
who inquired about his practice. By making these changes, he increased the
number of patients he was operating on to 40 percent. His practice’s revenue
increased by 33 percent!

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Customer needs change as they progress
Clearly, with this much at stake, you benefit from understanding patient relationship theory and implementing it in your practice. This means developing
a strategy to meet patient needs at each decision point. Listen to the questions patients are asking and be sure you have the answers they are looking
for. The better you understand their needs at each step, the better you can
meet them.
To complicate matters, your potential customers or patients cannot always
articulate their needs. What questions do your prospective patients ask as
they engage with your practice and move from stage to stage? Each question
represents a decision point that is critical to them and to you!
Unless prospective patients receive the information or support they need
at their current stage, they stop and do not progress to the next step. They exit
your practice, and discontinue their search completely or go to other practices
looking for the answers to their questions that your practice failed to provide.
Clearly, the more patients who exit your practice, the fewer who remain to
reach your surgical schedule. Even worse, you turn out dissatisfied patients
who are less likely to remain in your practice or to refer to you. Your revenue
and bottom line reflect this negative outcome.
In some cases, practices know when they do not meet the needs of their
patients. Typically, in medicine, however, many practices blame the patient
rather than search for root causes in their own practice strategy or performance. Some of the common complaints about patients exiting a failed care
and communication process are:





“Patients who are no-show weren’t going to buy.”
“Patients who need to ask the price aren’t having surgery.”
“She was just shopping.”
“He wasn’t really serious anyway.”

Learning to listen by tracking decision points
As patients progress along the PRL, we can posit some of the questions patients
are asking. Their subsequent behavior is your answer about how successfully
your practice meets their needs. Once you understand your patients’ questions and their responses, you can use that information to develop a care and
communication system to help them progress along the PRL.
The following are some, but not all, of the questions your patients are
asking. As you reflect on these questions, ask yourself whether your practice

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has a strategy that answers these and other questions. This exercise gives you
the opportunity to improve your patient interface, your revenue, and your
bottom line.
• Inquiry (Telephone, Internet): “Will my initial encounter with your practice confirm my confidence in the quality of this practice?”
◦ If “Yes”, they make an appointment and move one step forward in their
relationship with your practice.
◦ If “No”, they exit at the Inquiry stage, and your practice loses the revenue opportunity their call represented.
◦ Information Only: One other possible outcome represents a “Maybe”
choice. They do not make an appointment, but agree to receive additional information about your practice. In this case, all is not lost. They
are giving you the opportunity to re-engage them, and, if you are successful, they make an appointment after one or more additional interactions.
• Appointment: “Now that I have an appointment scheduled, will the practice’s follow-up validate my decision to consult with them?”
◦ If “Yes”, then they keep the appointment and your practice builds on
the opportunity of building on this initial contact.
◦ If “No”, there are two options. In either case, you may have an empty
consult slot and lose its potential to generate revenue.
• No-Show: The most common negative outcome is the disappointing
no-show.
• Appointment Cancellation: Despite having made the appointment,
the patient calls and cancels the appointment.
◦ If “Maybe”, an alternative outcome is that the patient cancels this
appointment but still actively considers your practice. Your sales strategy
(newsletters, seminar invitations, notice of specials, etc.) for maintaining
contact with patients who are at the Appointment stage offers a potential
means to re-engage these patients.
• Consultation: “Was my consult experience with the doctor and staff so
positive that I am going to stop considering all other possible providers?
“Do I know them, like them, and trust them to care for me during this
important life choice?”
◦ If “Yes”, they schedule surgery and deepen their relationship with your
practice.

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◦ If “No”, they exit the practice and either do not go forward with surgery
or, more likely, schedule with another practice which better meets their
needs.
◦ If “Maybe”, they do not commit initially, but may do so after followup over time. Your sales strategy for maintaining contact with patients
after consultation is another clear differentiator. Practices with a defined
follow-up system continue to schedule surgery over time and outperform
their peers.
• Surgery Scheduled: “Having scheduled surgery, does the subsequent
active interest and proactive care by the doctor and staff validate my decision?”
◦ If “Yes”, they complete surgery as planned. Your practice earns the
opportunity to move them into a deeper long-term relationship, represented by the next few stages.
◦ If “No”, they cancel surgery. The present revenue derived from their
surgery along with future revenue and potential referrals are all lost to
your practice.
◦ If “Maybe”, they cancel surgery for reasons such as medical clearance,
family issues, or financing issues. If your practice has an appropriate
follow-up process, you can re-engage them and recapture the revenue at
a later point.
• Surgery Completed: “My surgery is complete. Am I satisfied with my
surgical result and my total patient experience?”
◦ If “Yes”, they progress to a higher level of commitment and relationship.
◦ If “No”, they exit your practice and tell many more people about their
negative experience than any happy patient ever does.
◦ If “Not Yet”, then they are telling you “Maybe” when they let you
know that they are not satisfied with their surgical or treatment outcome.
They give you the opportunity, perhaps with a revision, to restore their
confidence and re-engage them for a long-term relationship.
• Retention: “Do I want to remain with this practice for future care?”

◦ If “Yes”, they remain in your practice and give you the opportunity to
further communicate with them and prompt their interest in additional
services.
◦ If “No”, you earned the revenue of their current surgery, which is
good, but you have lost the often more valuable future services and
referrals.

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• Referral: “Am I so happy with my outcome, both in my care and experience,
that I want to become an advocate and share my experience with my friends
and family?”
◦ If “Yes”, they refer their friends and family to your practice. They may
also agree to share their pictures, serve as a reference for potential
patients, and participate in your marketing or on your website.
◦ If “No”, they may prefer privacy about their own surgery, but choose to
have future services themselves, which may prompt referrals later.
Clearly, from all this potential for interaction and revenue, you must make
sure that your practice has a plan to respond appropriately to these questions
and others. First, define a process to meet patient needs; then, document all
steps, develop patient materials, train your team, and implement your plan.
Use the Test-Track-Refine-Repeat process to optimize performance.

Using Metrics to Manage Your Practice
Too often surgeons make uninformed decisions about patient behavior or
practice performance and wonder why their solutions do not produce the
desired results. Multi-million dollar practices cannot be run on gut instincts.
We need a data-based approach to diagnose business processes and determine
their success.
How do you know if your theories about what your patients want and
need are correct? Metrics and benchmarks can help you make your strategy or
identify where change is needed. Metrics enable you to take and evaluate data
objectively to improve business outcomes. You spend less time managing and
can have more impact on revenue and the bottom line.
Tracking business performance metrics is a well-known business practice in
the manufacturing sector. Today’s IT systems can bombard us with data, but
the data must be relevant to improving business outcomes and profitability.
We are not gathering data from a surgical practice as an end in itself, but as
a means to create improvement. There is no point in extensive measurement
or reporting unless we can use the information to achieve key objectives.
It is sometimes difficult to know the correct metrics to measure and then
to gather appropriate data during complex business processes, but the benefits
of doing this are clear.
• Strategy — Data provide a framework for evaluating your business strategy.
Benchmarking your practice against known norms helps you take advantage

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of the best business practices. You can then adjust your strategy to take
advantage of proven solutions.
• Responsiveness — Your financial statement cannot tell you what is happening in the marketplace until it is too late to do anything about it. By
proactively monitoring metrics, you can spot changes in patient behavior
or practice performance more quickly and improve your response to threats
and opportunities.
• Prioritization — When you know which metrics really drive your practice’s
success, you can stop monitoring less relevant information and focus on the
metrics and benchmarks that will help you determine what is working and
what is not. Then, you can use the information to prioritize and work on
what is most important — driving revenue to the bottom line.
By monitoring a few key business metrics, you can assess what is happening in your practice and take positive action to improve business outcomes.
“If you can’t measure it, you can’t manage it” is the mantra of all performance
measurement. This entails scientific, data-based approach, and you should find
that it is a comfortable fit. I like the variation, “If you can’t measure it, you
can’t improve it.”

Applying metrics to patient relationships (and revenue)
Figure 5 offers another view of the potential decision points from initial
Inquiry to Surgery Completed. All the “yes/no” decisions are shown with
the potential impact. This flow chart shows how many opportunities exist for
a patient to exit your practice, i.e., “Plan Cancelled”. Avoiding this negative
outcome is why we need to work so hard to meet patient needs at each step
in their decision processes.
Each of the decision points shown on the flow chart in Fig. 5 has at least
one associated metric indicating the ratio of patients who move forward from
that decision point to the next. It is important that you understand the language related to the metrics that we use to evaluate our practice. We use two
dominant terms to measure the movement of patients along the life cycle:
conversion rates and capture rates.
• Conversion rate measures the ratio of customers who convert from a
lower stage of the customer relationship to the next higher one. For example, when a patient who has made an appointment arrives for her consult, she has converted from the lower Appointment stage to the higher
Consult stage.

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Fig. 5.

Progression of stages in a cosmetic surgery.

• Capture rate measures the ratio of multiple-stage conversions. Consult
capture rate, net scheduling rate, and practice capture rate track multi-stage
decisions.
◦ Consult capture rate (CCR) reflects the number of inquiries who
arrive for a consultation. It includes the Inquiry-to-Appointment and
Appointment-to-Consultation conversions. The resulting CCR counts
only the inquiries that advanced to consultation. The CCR excludes all
patients who did not make an appointment, canceled their appointment,
or were no-shows for a scheduled consultation.
◦ Net scheduling rate (NSR) measures the number of consultations
for which surgery was completed. It includes the Consultation-toSurgery Scheduled conversion rate and the Surgery Scheduled-toSurgery Completed conversion rate. The NSR excludes all patients who
did not schedule surgery, and deducts the conversion rate of those who
scheduled surgery and subsequently canceled. The NSR is the ratio of
cases completed to consults.
◦ Practice capture rate measures the multiple stages from Inquiry
through Surgery Completed. It excludes patients who did not make
an appointment, keep the appointment, schedule surgery, or complete
surgery.

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Note: To take advantage of the data and business performance information
inherent in these metrics, your practice software must be capable of tracking
the decisions on the life cycle.

Using best practice data to evaluate your practice
In order to understand metrics, it is helpful to review the history of the development of the Inform&Enhance® (I&E) software that I created for the plastic
surgery industry in the early 1990s. In trying to understand the behavior of
the cosmetic patient, we:
• Determined decision points to be measured (i.e., stage to stage on the PRL);
• Measured the decisions using a broad array of procedural, process, and
demographic information;
• Developed performance metrics by computing the ratios of patients exiting
the process at various stages and/or moving forward in our practice;
• Tested targeted solutions to change our practice’s results based on our
current performance;
• Evaluated our solutions based on changes in our own internal metric against
our goals; and
• Continued to refine in order to achieve the best results possible.
What we could not do, however, was compare our results to a best practice standard, which was unknown at that time. We gained the information
we needed after working with hundreds of plastic surgery practices and measuring performance in practices of all sizes, in all areas of the country, and
in all phases of career development. After tracking multiple levels of practice
performance, we arrived at a best practice performance along with a standard
practice performance, which is the value that occurs most frequently in our
measurements of practice performance. Table 1 shows the resulting best practice standards for the various decision points, as well as the standard practice
performance, in terms of conversion and capture rates.
What conclusions are possible with the combination of metrics and best
practice and standard practice performance?
• Given the same opportunity, the best practice operates on 50 percent of
inquiries (ratio of 1:2). Presuming an average case revenue of $6000, best
practices collect $300K per 100 inquiries.
• The standard practice functions at a lower level at every key decision point.
As a result, the standard practice operates on 18 percent of inquiries

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Table 1.

Initial Stage

Cosmetic surgery metrics and best practices.

Next Stage

Best
Practice

Standard
Practice

Conversion
Conversion
Conversion

95%
85%
65%

75%
65%
45%

Conversion

4%

20%

Conversion

96%

80%

Type
Conversion Rates

Inquiry
Appointment
Consultation
Surgery
Scheduled
Surgery
Scheduled

Appointment
Consultation
Surgery
Scheduled
Surgery
Canceled
Surgery
Completed

Inquiry

Consultation

Consultation

Surgery
Completed
Surgery
Completed

Inquiry

Capture Rates
Consult Capture Rate

81%

49%

Net Scheduling Rate

62%

36%

Practice Capture Rate

50%

18%

(1:6) and collects $108K per 100 inquiries. This represents a decline of
74% in completed surgical cases as against the best practice.
These outcomes demonstrate the remarkable differences in revenue when
compared to effort and expense. The data also point the way to practice
growth for standard practices. By improving conversion and capture rates
at key decision points, it is possible for standard practices to improve revenue
and performance significantly.
Looking at it another way:
• If the best practice wants to schedule 50 cases and earn revenue of
$300K, it needs 100 inquiries.
• The standard practice needs 278 inquiries to generate the same 50 cases
and the same $300K of revenue. The standard practice needs almost three
times as many inquiries to achieve the same revenue. Standard practices
are working much harder and spending significantly more money to attract
patients — most of whom will exit the practice life cycle without scheduling.
In the standard practice, the majority of patients exit the PRL. A much
smaller number of patients enter the life cycle and remain for surgery or
treatment. To increase the number of cases, practices presume the problem is

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that not enough people are entering the life cycle. Instead, practices should be
evaluating why people are leaving and use that information to fix the problems
that cause the mass exodus. You can understand why most practices, lacking
the metrics to diagnose the cause of their low surgical volumes, conclude that
they have a marketing problem. After all, they need 278 inquiries to schedule
50 cases.

Analyzing your practice with deeper levels of data
Think of tracking the decision points as “Level 1”. Level 1 metrics enable you
to pinpoint problem areas in your practice’s performance. To move to the
solution phase, however, you need Level 2 data as well, reflecting the tracking
of other factors at decision points. These other factors provide more data for
further evaluation within your own practice or in benchmarking against other
practices.
• Stage: What is the decision point being analyzed?
• Procedure: What procedure is involved?
• Time Frames: What time frames are involved? When did the patient enter
the lower stage and when did they move to the next higher stage? Or, when
did they exit the process?
• Referral Source: What is the patient’s referral source?
• Demographic Data: What demographic data are you collecting that might
be of potential use in trying to understand patient behavior?
• Staff: What are the names and roles of key staff members interacting with
the patient?
• Physician: Which doctor is involved?

Dealing with a problematic stage issue — no-shows
Suppose that, by comparing data from your practice and best practice metrics,
you determine that your no-show rate is too high. Your rate is 25 percent,
while the best practice rate is 15 percent. While a 10-percent difference may
not sound like a lot, your rate is actually 67 percent higher than the ideal! If
you schedule consults at 50 percent, then every no-show is costing you half
of one case. If your average case is $6K, then each no-show deprives you of
$3,000 of revenue. If you have 10 no-shows in a particular month, you lose
five cases and $30K of revenue.
Therefore, these issues are significant and merit attention to details.
Knowing that your no-show rate needs intervention does not help you find

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solutions. You need additional information. If you run your data, you may
find one or more problems. The examples that follow could apply to one
procedure, or aspects of these examples could apply to multiple procedures.
• Stage: Appointment.
• Procedure: Breast augmentation.
• Time Frames: Significant increase in the no-show rate if patient waits more
than two weeks for an appointment.
• Referral Source: Internet (in the old days, it would have been the Yellow
Pages).
• Demographic Data: The highest rate of no-show is the twenty-somethings.
• Staff: Your new receptionist has a higher no-show rate than anyone else
taking calls.
• Physician: Your younger, less well-known doctor has a higher no-show rate.
With two levels of analysis, you can now move to the solutions phase. First,
in contrast to many in the industry, I do not think high no-show rates are the
fault of the patient. In my view, this just passes the practice’s problem onto
the potential patient. If patients do not arrive at our practice, I presume there
is something I can do to change my business processes and attract the patient
to our practice. I do not punish potential patients for practice issues that have
known solutions.
Continuing with the data analysis above, let’s look at how we could change
the patient interface as a result of what we have learned.
• Stage: Appointment.
• Procedure: Breast augmentation.
• Time Frames: Significant increase in the no-show rate when patients wait
more than two weeks for appointments.
• Solution: Lower the no-show rate by making sure that all breast augmentation patients are seen within two weeks.
• Referral Source: Internet inquiries have a higher no-show rate.
• Solution: Develop special protocols for Internet inquiries. Make sure your
practice deals with these patients in the here and now.
• Demographic Data: The highest rate of no-show is the twenty-somethings.
• Solution: Get patients’ birth dates and change your appointment confirmation protocols by age.
• Staff: Your new receptionist has a higher no-show rate than anyone else
taking calls.

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• Solution: Remove her from your new patient call rotation and transfer
callers to staff with lower no-show rates. Also, provide additional training
so that she can be part of the call rotation.
• Physician: Your younger, less well-known doctor has a higher no-show rate.
• Solution: Improve the talk track on the initial call and the materials sent subsequently to confirm the appointment. Make sure your staff and materials
do a better job of “selling” the new doctor.

Taking advantage of a positive stage issue — surgery
scheduling
In this example, we can use a positive benefit of Level 2 data to grow practice
revenue. By comparing data from your practice and best practice metrics, you
determine that your combined surgery scheduling rate is 10 percent below
best practice. Your practice’s blended rate is 55 percent, rather than the best
practice standard of 65 percent. Examining Level 2 data, you find elements
of your practice that are already performing at best practice.
Again, a seemingly small difference translates to big revenue impact. If
you can find ways to raise your practice-wide conversion rate by 10 percent, then your surgical revenue increases by 18 percent. Presuming that you
see 50 consults a month, and you have a $6000 average case, then an 18percent increase adds five cases per month; over a year, those five cases per
month add up to $360K! These numbers are significant enough to merit your
attention.
Any Level 2 data showing some conversions at or above 65 percent can be
used to grow practice revenue. The examples that follow could apply to one
procedure, or aspects of these examples could apply to multiple procedures.
• Stage: Consultation.
• Procedure: Breast augmentation converts at 65 percent.
• Time Frames: The average time frame for conversions reaching 65 percent
is 60 days after consult.
• Referral Source: Physician referrals convert at 65 percent.
• Demographic Data: You find a range of zip codes that convert at above
55 percent.
• Staff: Your coordinator has had a tummy tuck, which she converts at
65 percent.
• Physician: One of your two doctors converts liposuction at 65 percent
while the other converts at 45 percent.

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Continuing with the data analysis approach above, let’s look at how we
could change the patient interface as a result of what we have learned from
Level 2 data.
• Stage: Consultation.
• Procedure: Breast augmentation converts at 65 percent.
• Solution: Increase the breast augmentation portion of your practice. To
achieve this goal, you might improve the augmentation section of your
website and add additional photos to your site. You might start a blog
and focus on breast augmentation. You could also increase marketing for
augmentations by analyzing which referral sources produce breast augmentation buyers for your practice.
• Time Frames: The average time frame for conversions reaching 65 percent
is 60 days after consult.
• Solution: Review your post-consult follow-up protocols and add additional
follow-up steps so that your patients receive longer-term follow-up. Also,
set up management controls to be sure that your coordinator is continuing
to follow-up according to your prescribed protocols. This should help you
reach your 65-percent conversion goal.
• Referral Source: Some physician referrals convert at 65 percent.
• Solution: Review your referral program and communication to referring
doctors. Determine the conversion rate per referring doctor. Monitor the
revenue per referring physician and be sure that the attention from your
practice (and from you personally) recognizes the value of these referrals to
your practice. For physicians referring patients who schedule at a 65-percent
rate, you may need to develop a special program of recognition. You might
institute a “Lunch and Learn” program for such referring practices to keep
awareness high. You could ask for patient approval to include pre- and postoperative pictures in your follow-up letter to the referring physician. At the
very least, be sure that your communication with these referring physicians is
optimal. With each patient’s permission, be sure to write about the outcome
after surgery and recovery. Continue to make sure referring physicians know
that you appreciate their referrals and care for their patients optimally.
• Demographic Data: Significant parts of your revenue come from key zip
codes and these produce higher conversion rates for some procedures.
• Solution: Use this information to target your marketing to these areas.
Feature the “winning” procedures when communicating about your

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practice, and use the media that target these zip codes to reach out to
residents in these zip codes.
• Staff: Your coordinator has had a tummy tuck, which she converts at
65 percent.
• Solution: Recognize and use this positive attribute. What can you do to
improve your website information about tummy tucks? Try to transfer all
incoming new patient calls about tummy tucks to your coordinator. Make
sure your coordinator is available to talk with all patients interested in
tummy tucks. She can speak about her experience and show her beforeand after-surgery photos.
• Physician: One of your two doctors converts liposuction at 65 percent
while the other converts at 45 percent.
• Solution: How you handle this depends on the revenue structure of your
practice, but here are some of the possible ways to take advantage of the
difference in conversion rates.
◦ Agree that, when undecided callers are interested in liposuction, the
doctor with the higher conversion rate will be suggested. (These referrals could be offset by other procedure referrals to the other doctor or,
if the doctors are partners, their joint incentive should be to schedule
procedures at the highest proven rate.)
◦ Try to analyze why one doctor converts at a higher rate and transfer
those consult processes to the other doctor.
The examples above demonstrate ways that your practice can benefit
from taking an open-minded and data-based approach to improving revenue.
Benchmarks can help you pinpoint areas of concern where the appropriate
percentages of patients are not converting to the next stage. You can also
use benchmarks to find opportunities where you can learn from the positive
responses to your practice and redirect your efforts to attract similar patients.
Seemingly small differences — shaving a 10-percent loss off no-shows or
gaining 10 percent in the surgery scheduling rate — may seem small, but their
cumulative effect represents hundreds of thousands of dollars of additional
revenue to your practice each year.

Adding metrics-driven processes to your practice
Over the years, I have watched hundreds of practices become stronger and better organizations by using metrics. Revenue grows more predictably. Everyone

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knows what is being measured and why. When you make decisions based on
data, everything is easier and more rational.
If this thought process and business approach appeals to you, then you
might ask how to go about adding a metrics-driven process to your practice. Implementing metrics as a management approach follows the same
path as most new initiatives. You follow a sequential process that enables
you to capture the data points, enlist the support of your team, and then
use the metrics to evaluate your current performance and improve future
performance.
• Define your goals. It amazes me how few practices set specific goals. Most
practices do not have budgets for revenue as well as expenses. They lack
daily or weekly sales objectives. They do not set expectations for conversion
rate goals in patient encounters. The result is therefore very laissez-faire and
far less effective. You cannot manage nearly as effectively without knowing
where you want to go and how close you are to getting there.
• Communicate to your team. Expect some staff resistance when you begin
using metrics. Unless you explain your reasons carefully, they may feel
threatened. Never use the metrics to punish, but to teach and to train. As
they see positive changes occurring, you can expect more buy-in. Metrics
provide far more protection than not. Your team should also find that they
have more of a voice in the practice because data often confirm their view
of what is happening with patients and why patients are exiting rather than
moving forward.
• Gather data and report routinely. You may need new software or new
businesses processes to gather the data you need to manage revenue more
proactively. If you cannot track the key metrics in your practice management
software, then you may need to create manual systems or change software.
The information is too vital to miss.
• Determine how you are going to measure progress. Presumably, your
main goal is to drive revenue. If you want more patients on your OR schedule, then use the conversion metrics outlined above to segment and analyze
key patient interactions.
• Compare your practice to others. Once you have actual data about your
practice, then you can benchmark it vis-à-vis key metrics. Are you at best
practice standards? Is this true for all of your metrics? Alternatively, does
your performance on some metrics indicate the need for improvement?
Data is your friend. When you know your practice’s strengths, you can take
advantage of them. When you spot weaknesses, you can act to overcome

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them. You will find yourself creating your own future rather than evolving
into a future that does not fulfill your goals.
• Make data-based decisions. Metrics help you improve decision-making.
You can focus on the changes that drive income and the bottom line. In
your clinical practice, you use blood tests to determine if patients are healthy
enough for surgery; if a patient’s blood count pinpoints a problem, then the
deviation from normal ranges guides your intervention. It is the same on the
business side of your practice. If a metric is “healthy”, then you can move
on and treat the ones that do not fall within normal ranges. Think of it as
triaging. Focus on the areas of performance that are most life-threatening,
and then work your way back to less critical issues.

Focusing on What is Most Important
My focus is on revenue production rather than cost containment. If you made
a list of great entrepreneurs, you would not find a single one who “saved” his
or her way to success. Certainly costs matter, and if you can effectively grow
revenue and manage costs, you will achieve the best possible results. If you
want to grow revenue, then you need to focus on what is important and what
will have the greatest impact in the shortest amount of time.
The Pareto principle (80-20 rule) is an extremely useful rule of thumb in
business. It is used in a variety of ways, the most common being the observation that 80 percent of revenue comes from 20 percent of customers. For a
number of years, I have applied the Pareto principle to the top six procedures
that produce revenue in practices, i.e., 80 percent of revenue is produced
by 20 percent of procedures. If you look at the top six revenue-producing
procedures in your practice, you will probably find that this group represents
approximately 80 percent of your practice revenue. Similarly, this observation
has been borne out in hundreds of practices where the top six sources produce
80 percent of revenue.
At a second level, it appears that your top three procedures should produce
at least 50 percent of your revenue. Let me share some examples. Randomly, I
gathered data for a dozen surgeons who practice all over the U.S. Their time
in practice ranges from practicing a few years to many decades. The top six
procedures vary from breast and body practices to facial surgery practices. As
seen in Table 2, the average revenue produced by their top six procedures
comprised 79 percent of the total revenue and the average revenue produced
by the top three procedures was 60 percent of the total revenue.

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Table 2.

Data on top revenue-producing procedures in plastic surgery.

Surgeon

Region

1
2
3
4
5
6
7
8
9
10
11
12
Average

East
East
East
East
South
South
South
South
West
West
West
West

Revenue Produced by
Top 6 Procedures

Revenue Produced by
Top 3 Procedures

70%
70%
79%
83%
83%
91%
81%
88%
71%
83%
70%
78%
79%

46%
47%
62%
67%
66%
77%
66%
69%
44%
63%
49%
60%
60%

If your top procedure or source generates 30 percent of revenue, then
optimizing that procedure or source is going to improve or protect 30 percent
of your revenue. Most of the surgeons shown in Table 2 can affect 60 percent
of their surgical revenue by focusing on their top three procedures.
The Pareto principle helps us focus on the customers, procedures, and
sources that matter the most. If you want to make changes in your practice
revenue quickly, then use the 80-20 rule to analyze and prioritize your practice.
You need to be watching your top six procedures for changes in percentage
of revenue, new patient activity, scheduling rates, etc. A decline in your top
procedures will have a greater impact on your revenue than procedures that
produce a lower percentage of your revenue, and such a decline endangers
your practice.
Similarly, if you want to grow revenue, then use a top-down approach. To
have the quickest impact on your revenue, concentrate on your “winning”
procedures. Start with the procedure that produces the most revenue. Ask
yourself how you are making sure it remains strong. Is your website up to date?
Are your before-and-after photos current? Do you have patient testimonials for
your top procedures? Is your staff trained to turn emails or phone calls about
your top procedures into consults and cases? Are you planning a seminar or
marketing campaign? You know where your focus should be: on your winning
procedures.

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Using Key Performance Indicators (KPIs)
in Your Practice
My expertise is on the revenue side of cosmetic practices, and I want to provide tools that can help you make better decisions about the revenue and
management of your practice. While these principles apply most directly to
the cosmetic component of your practice, they can also help you evaluate
reconstructive and insurance revenue issues as well.
Your practice can grow revenue if you can adapt the concept of key performance indicators (KPIs), defined in the glossary at the end of this chapter.
For our purposes, presume that the goal of your practice is to increase revenue
per surgical patient. One seemingly obvious approach would be to increase
the number of multiple procedure cases. Depending on your practice mix, this
may or may not be possible. Certain combinations can potentially be featured
together: eyelid lifts with facelifts, tummy tucks with liposuction, or nosejobs with chinjobs. However, it is hard to have a strategy to add additional
procedures to augmentations.
To increase revenue per patient, you need to evaluate your top procedures
using revenue per (surgical) hour or RPH as your approach. This method
presumes a fixed professional fee rather than a variable time-related fee. To
determine RPH, the professional fee is divided by your surgical time in the
OR. The times associated with opening and closing the OR are not included.
Using a basic example for any procedure:





Your professional fee, is $2000.
A 1-hour case equals $2000 RPH.
A 1.5-hour case equals $1333 RPH.
A 2-hour case equals $1000 RPH.

We use RPH to evaluate various procedures. Table 3 includes actual RPH
from a number of plastic surgeons around the U.S. Some are relatively young,
others are mid-career, and still others are approaching retirement. Their practices run the gamut of procedures, but have a common thread: there is a
measurable difference in RPH depending on whether they are operating at
the income of their most profitable procedure or their least profitable procedure out of their top six procedures. The average difference is 31 percent,
and ranges from 10 percent to 41 percent. Using the average, they need an
extra hour in the OR for cases based on their number six RPH if they want
to produce the same revenue that two hours of their highest RPH-generating
procedure produces.

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Table 3.
surgery.

RPH data for the top six revenue-producing procedures in plastic

Surgeon Highest RPH Lowest RPH Percent Difference Average RPH
1
2
3
4
5
6
7
8
9
10
11
12
Average

US$2575
US$3131
US$1388
US$2083
US$2023
US$2003
US$1860
US$2364
US$4189
US$3074
US$2718
US$2083

US$2103
US$2154
US$1091
US$1874
US$1305
US$1525
US$1105
US$1667
US$2763
US$1983
US$1817
US$1874

18%
31%
21%
10%
35%
24%
41%
29%
34%
35%
33%
10%
31%

US$2338
US$2308
US$1218
US$1954
US$1589
US$1831
US$1592
US$1920
US$2891
US$2286
US$2055
US$1954

Once you have this information, you can make changes in your business
strategies or in your surgical approach. You can market to attract procedures
with higher RPH. You can work on your surgical techniques to reduce OR
times (and increase RPH) for procedures that produce high percentages
of your revenue, but at lower RPH. This analysis can be combined with
patient and source information to help you craft the practice that meets
your goals.

Creating the Future You Want
My goal in this chapter is to give you business concepts and information that
can help you achieve your goals for your practice and yourself. The business
outcomes you seek will not just happen; rather, they occur because a consistent
series of events creates a predictable outcome, just like in surgery.
The business management guru Tom Peters observed, “Process beats substance every day.” When you have the ability to provide the substance of quality
medicine, then your family, your patients, and the marketplace need you to
understand the value of process. Otherwise, you will find yourself losing cases
to less capable doctors who have better business processes. All of us know
of bad doctors who are financially successful because they employ successful
business strategies.

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The cornerstones of success are:





Delivering consistent, high-quality surgical outcomes;
Empowering your team to help you create a quality patient relationship;
Defining your goals and strategies to achieve them; and
Optimizing practice revenue and your personal income by using metrics
and benchmarking.

Quality medicine supported by the right business strategies creates a winning combination that leads to financial success.
Revenue and Profitability
Your practice isn’t automatically profitable, but at some point, revenue drops
to the bottom line — straight into your pocket. You need to know where
that is and to do whatever you can to reach that point on a daily, weekly and
monthly basis. A few extra cases can make all the difference in what you take
home or what you don’t.
To illustrate this point, let me share an airline example that applies both
to consults and to your OR schedule. If an airplane takes off with empty
seats, the airline can never recapture that lost revenue opportunity. It’s the
same in your practice. If your consult schedules are not managed well and
your operating suites are not scheduled optimally, then you’re forfeiting
revenue just like the airlines. And, like the airlines, it is virtually impossible
to recapture their lost revenue.
Here’s an example from the book, Nuts! Southwest Airlines’ Crazy Recipe
for Business and Personal Success, by Jackie and Kevin Freiberg. As you probably know, Southwest Airlines (SWA) is the only profitable airline in history.
Yet look at what creates their profit.
The authors quote the following statistics. In 1994, SWA’s average oneway fare was $58. SWA flew 624,476 flights that year which generated an
annual profit of $179,331,000 or $287 per flight. Only 3 million of the 40
million customers SWA carried that entire year determined whether SWA
made a profit or not. Said another way, the entire profit at SWA came from
just five passengers per flight!
The corollary is that it took 74 passengers per flight to pay the expenses.
Every time I fly on SWA, I remember this example as I watch the passengers board. In 1994, it wasn’t until the 75th passenger got on board
that SWA became profitable. What if SWA had not had the business practices that enabled them to sell those extra 5 seats per flight? If SWA
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(Continued)
lost only one of those customers per flight, their profit would have been 20%
lower.
The equivalent for our practices relates first to filling budgeted slots in
our OR schedules. At an earlier point in the customer relationship lifecycle,
you also have to be sure your consult slots are filled with patients that your
staff have determined are likely to schedule surgery and have the means to
pay for it!
Think about SWA’s profit and take the time to get that extra patient in to
your consults and into your operating rooms. You’ll see the difference this
approach makes in your bottom line.

Glossary
• A business metric is any type of measurement used to gauge some quantifiable component of a company’s performance, such as return on investment
(ROI), employee and customer churn rates … and so on. Business metrics
are part of the broad area of business intelligence, which comprises a wide
variety of applications and technologies for gathering, storing, analyzing,
and providing access to data to help … users make better business decisions.
Systematic approaches … can be employed to transform an organization’s
mission statement and business strategy into specific and quantifiable goals,
and to monitor the organization’s performance in terms of achieving those
goals. (Source: SearchCRM.com Definitions.)
• Key performance indicators (KPIs) are financial and non-financial metrics
used to help an organization define and measure progress toward organizational goals. KPIs can be delivered through business intelligence techniques
to assess the present state of the business and to assist in prescribing a course
of action. The act of monitoring KPIs in real-time is known as business
activity monitoring. KPIs are frequently used to “value” difficult to measure activities such as the benefits of leadership development, engagement,
service, and satisfaction. KPIs are typically tied to an organization’s strategy. A KPI is a key part of a measurable objective, which is made up of a
direction, KPI, benchmark, target and time frame. For example: “Increase
Average Revenue per Customer from £10 to £15 by EOY 2008”. In this
case, “Average Revenue Per Customer” is the KPI. The KPIs differ depending on the nature of the organization and the organization’s strategy. They
help an organization to measure progress towards their organizational goals,

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especially toward difficult to quantify knowledge-based processes. (Source:
Wikipedia.)
• Best practice is an idea that asserts that there is a technique, method,
process, activity, incentive or reward that is more effective at delivering
a particular outcome than any other technique, method, process, etc. The
idea is that with proper processes, checks, and testing, a desired outcome
can be delivered with fewer problems and unforeseen complications. Best
practices can also be defined as the most efficient (least amount of effort)
and effective (best results) way of accomplishing a task, based on repeatable procedures that have proven themselves over time for large numbers
of people. Despite the need to improve on processes as times change and
things evolve, Best practice is … used to describe the process of developing
and following a standard way of doing things that multiple organizations
can use for management, policy, and especially software systems. (Source:
Wikipedia.)
• Benchmarking is the process used in management in which organizations
evaluate various aspects of their processes in relation to the best practice,
usually within their own sector. (Source: Wikipedia.)
• Customer relationship management (CRM) consists of the processes
a company uses to track and organize its contacts with its current and
prospective customers. CRM software is used to support these processes; the
software system can be accessed, and information about customers and customer interactions can be entered, stored and accessed. (Source: Wikipedia.)

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Preventative Maintenance
of Your Practice
G. Marshall Franklin, Jr., MBA, MHA

M

anaging a physician practice is the ultimate “multi-task” in business.
Most entrepreneurial ventures allow the entrepreneur to be dedicated
full-time to the development of the venture and to the functioning of the business. There is, however, a difference in the case of the physician entrepreneur.
The physician’s primary effort should be devoted to providing quality care,
refining surgical skills, and developing the clinical practice. If that is the case,
then, who manages the business? The true entrepreneur, physician or not, will
decide, “I will manage the business.” In that case, how does a business owner,
who is also the primary revenue-generating employee, fulfill both responsibilities? This chapter will help to address that question.

The Organization and Systems
According to Dictionary.com, the term “organization” is defined as:
“Something that has been organized or made into an ordered whole.” In
the case of a physician practice, the “ordered whole” is the sum of more parts
than most people ever realize. To make order of the whole, first dissect the
component parts. By breaking the business into smaller parts and focusing on
each aspect individually, we end up with more manageable units, making the
task less daunting. Approaching a practice systematically is very similar to the
systematic approach physicians take in tackling problems in clinical medicine.
Much like a clinical problem is broken into parts, entrepreneurs should break
their organization into parts. The irony, however, is that the practices I visit
usually exhibit no significant organization or identification of the component
parts that make up the practice as a whole.
A simple solution to this disorganization is the use of systems and processes.
By taking every major function of the business and applying defined rules and

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processes to the execution of this function, effective management emerges as a
possibility. Taking it one step further, the codification and requirement of staff
to follow these processes relegates the physician owner to the role of “systems
inspector” rather than that of coder/biller/receptionist/nurse/aesthetician/
patient coordinator/bookkeeper and finally surgeon.
Developing systems addressing all areas of the functional practice allows
the surgeon to provide objective guidance for the staff. This guidance facilitates execution of business processes in a fashion consistent with the desires of
the physician owner. Having objective systems in place, the physician can then
focus on his or her key role — providing excellent clinical care — while being
assured that the remainder of the business operates in the efficient manner
envisioned when the venture began.
The mere establishment of systems for practice operations, however,
never guarantees that they will be followed. The owner must inspect what
is expected. It is paramount as a business owner to ensure the staff is actually
following established procedures and processes. Address and correct deviations immediately. Failure to correct a problem or deviation from policy sends
a de facto message to the staff that the deviation is acceptable. To manage and
run an efficient operation, any system needs regular evaluation, feedback, and
correction to stay on point.

Thermodynamics and Practice Management
Entropy is a thermodynamic concept establishing the tendency of all matter in
a closed system to move toward a greater state of disorder. A simple example
is the construction of a house. To build a house, significant energy (labor,
machines, and materials) is applied to the creation of order of various pieces
of matter (lumber, nails, wiring, plumbing, etc.). When complete, the energy
expenditure results in significant order of the matter (materials). This order is
what we call a house.
Now fast forward and suppose you walk away from this house and never
maintain it, repair it, or protect it. In other words, you never put energy
towards maintaining the order of the matter. What will happen? Undoubtedly
the house will deteriorate and eventually fall down, and ultimately many of
the component materials will return to their most random state. Wood rots,
nails, and pipes will rust away, and in the end all components will eventually
return to their lowest molecular derivatives.
The practical application of this principle to the business of practice
management is that any system, no matter how well-established, thorough, or

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valid, will move toward a state of greater disorder without the input of energy.
This energy input is the essence of business management. A business owner, no
matter how intelligent and well-meaning, will fail if he or she does not deliver
the energy necessary to maintain the established systems. Much less energy is
needed to maintain a well-ordered system than the initial energy required to
establish the system or the energy necessary to recover a broken one.

Operational Systems in Practice Management
In order to demonstrate the details involved in developing functional systems
defining the scope of management, let’s explore the most important ones.
The example systems represent a composite best practice model and will not
necessarily meet the needs of every practice or every physician. Best practices
should be adapted to fit the most efficient process for your practice.

Patient Intake and Handling
Handling phone calls
As with any business, the initial patient interaction with the practice is a
critical juncture determining whether the patient takes the next step in the
relationship (i.e., scheduling an appointment) or leaves and calls a different
practice. The receptionist answering the telephone holds one of the most
critical positions in any plastic surgery office, yet he or she is often the least
experienced, lowest-paid employee in the practice. The staff person on the
phone determines whether the caller hangs up or comes in for an appointment.
Given the importance of call handling in the overall success of the practice,
having defined systems in place outlining the expectations and responsibilities
of the staff regarding incoming calls is critical. What are the components of a
successful telephone handling policy?
• Make sure a live person answers the call. Does anyone have a positive story
related to an automated attendant?
• Use names (staff member’s and patient’s names).
• Handle the call or know where to direct (training).
• Use voice mail minimally.
• Do not use an answering service as a crutch during lunch or late afternoons.
• Establish a system for handling calls from referring MD offices.
• Set up a back line for staff, families, and vendors.

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Creating a systematic and repeatable process for handling the calls as they
come in will maximize the chances that the patient will ultimately schedule
an appointment. Many practices employ a “cheat sheet” to ensure that the
proper dialog occurs on each and every phone call. A telephone intake record
(TIR) can serve this purpose. A sample TIR is included below, but can always
be customized to suit the needs of the individual physician.

Telephone Intake Record:
Name: ______________________________ Procedure: _______________
How did you first hear about our practice?
Referral Source: _______________________ Detail: _________________
I would like to make sure that I answer your questions and give you the
information you need about the procedures you are interested in. Would
you mind if I ask you some questions?
• How long have you been considering having this procedure done?
• Are you familiar with this procedure? What do you know about it?
• Do you know anyone who has had this procedure? What did you think of
the results?
• Do you have any concerns as you think about __________?
• Do you have any family members who have questions or are unsure of
your decision to have ________?
• Have you been to any other offices? It is important to be informed,
research your options, and choose your doctor carefully.
• Is there a special event coming up you are preparing for?
• Once you have determined where you want to have your surgery, do you
have a time frame in mind?
What do you know about Dr. ________?
Great bedside manner
Board-certified by the American Board of Plastic Surgery
Top doctor recognition
Emphasizes the highest standard of safety and quality care for our patients
Locally/Regionally/Nationally well known
Lectures/Teaches other leading plastic surgeons
We always let our patients know in advance the cost of the procedure.
Ballpark fee given: _____________. Is that what you expected?
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(Continued)
Objection to price: Other patients have felt the same way, but once they see
their end result, they are happy they spent the extra money. Dr. ____________
does great work, and his patients love him.
• We have several different payment options available. We accept credit
cards, checks, cash, and financing through several agencies.
• I would like to refer you to our website for additional information and to
review some of our before/after photos.
Consult: Based on your needs, I would love to schedule a consultation for
you. Our consultations are __ minutes long. You will watch a video, meet
the doctor, review before-and-after pictures, get a finalized fee quote, and
review surgery dates. The fee for this consultation is ___.
• Objection: Many patients have commented on the quality of our consultations. The doctor will spend at least 30 minutes with you and provide
you all the information to make the right decision about your concerns.
Address: _________________________________________
_________________________________________________
City: ____________________ State: _________ Zip Code: __________
Daytime Phone: ________ Other Phone: _______ Cell Phone: _________
DOB: ________________ Interest Level: ________________
Appointment Date & Time: _________________________
Wait List Request? _________
Inquiry Only: As you are calling around trying to determine where you
will have your consult, I would like to send you some information about
the doctor and the procedure you are interested in. Can I get your contact
information?

Appointments/Templates
The one constant in any surgeon’s practice is his or her time, not only time
spent in the operating room, but also time spent in the clinic. Clinic time is
often viewed as a necessary evil for surgeons who usually prefer spending their
time operating. Establishing appointment scheduling templates allows for a
more efficient use of the surgeon’s clinic time. Putting the right patient in the
appropriate appointment slot during clinic hours ensures that the physician
sees the maximum number of patients during his or her clinic time, runs on
schedule, and is able to provide patients with the quality visit they expect.
Using appointment templates designed around the type of patient visit is a

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good approach to accomplish this goal. A typical plastic surgery clinic day
may be templated as follows:
9:00 AM
9:15 AM
9:30 AM
9:45 AM
10:00 AM
10:15 AM
10:30 AM
10:45 AM
11:00 AM
11:15 AM
11:30 AM
11:45 AM
12:00 PM
12:15 PM
12:30 PM
12:45 PM
1:00 PM
1:15 PM
1:30 PM
1:45 PM
2:00 PM
2:15 PM
2:30 PM
2:45 PM
3:00 PM
3:15 PM
3:30 PM
3:45 PM
4:00 PM
4:15 PM
4:30 PM
4:45 PM
5:00 PM

New Patient Consult
Post-op
Post-op
New Patient Consult
Post-op
Post-op
New Patient Consult
Follow-up/Re-talk
Post-op
New Patient Consult
Post-op
Follow-up/Re-talk
Lunch
Lunch
New Patient Consult
Post-op
Post-op
New Patient Consult
Post-op
Post-op
New Patient Consult
Post-op
Post-op
Follow-up/Re-talk
Office Procedure

Office Procedure

The underlying concept in the above-listed schedule allows for adequate
time to be scheduled for new patient appointments while accommodating the
post-operative, follow-up, and local procedures necessary in any practice. In

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a typical plastic surgical new patient consult, best practice dictates that the
patient first be greeted by the physician while clothed. This recognizes the
patient’s need to be most comfortable in a setting where the capture and
transmission of information is often critical. The majority of cosmetic patients
are women, and the majority of plastic surgeons are men. Oftentimes the
patient is uncomfortable in a clinical setting, and the last thing she wants to
do is meet her potential surgeon for the first time while undressed, in a paper
gown, showing a part of her body about which she is most insecure.
After the initial meeting and procedure discussion, the physician should ask
the patient to change into the exam gown and robe and then excuse himself.
While the patient is changing and having photographs taken, the surgeon
can see other patients on the schedule such as those coming in for postoperative visits. These are usually shorter in duration, simply involving a brief
physician–patient encounter, taking a quick look at the results, and answering
patient questions. Upon completion of the post-operative visit, the new patient
should now be ready for the physical exam. The physician returns with escort
in tow, conducts the exam, and then discusses the proposed treatment plan.
The patient may then dress and talk to the patient coordinator about price
quoting and scheduling. Once again the physician is free to conduct another
post-operative or follow-up visit, while the next new patient is brought to the
consult room.
Many opinions exist as to the most efficient clinic scheduling, but the
underlying concept is to establish and follow a realistic system allowing the
office and the physician to run on time. Exceptions and double-bookings
should be used sparingly, since these scheduling add-ons can throw the entire
schedule into disarray, resulting in a negative patient experience, especially for
new patients.
A further refinement to the scheduling template involves predetermining
the surgical interest of new patients. Breast augmentation patients are more
likely to schedule and complete surgery if they are seen within 10 days; outside of 10 days, the data show the incidence of no-shows and cancellations
increases dramatically. Blocking slots in the appointment schedule specifically
for breast augmentations can improve patient attendance in this demographic
group.

New patient paperwork
While the use of electronic medical records (EMRs) is becoming more common, the majority of plastic surgery practices still operate with traditional

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paper charts. Many purchase pre-assembled charts with tabs installed for the
various components of the patient’s treatment experience. Some example tabs
may be:








Correspondence
History and Physical
Photographs
Labs
Clinic Notes
Operative Notes
Demographic and Insurance Information.

Regardless of the order, the blank chart should be pre-assembled with
the required documentation ready to be put into immediate use upon arrival
of the patient. This allows for maximum productivity of the office staff time
when they are in the midst of a busy patient clinic day. New charts can be preassembled on days when the physician is in the operating room. Depending
upon your known conversion numbers, you may choose to make permanent
charts for cosmetic patients only after they schedule surgery. If 50 percent of
cosmetic consults schedule surgery, then half the time your staff is making a
thick, expensive chart for someone who will not be your patient; instead, use
single manila charts without dividers for cosmetic consults.
What new patient information should be included in a chart? While obviously the medical-legal information (such as patient history, dictation, operative notes, and exam findings) is included, other items are important as well.
For the cosmetic patient, a copy of the TIR should be included. This allows
the physician to refer quickly to the document as he or she is preparing for
the consult to understand what the patient’s desires, motivations, and interest
level are. It also allows for personal data to be used by the physician to “break
the ice” and establish a personal bond with the patient. These personal items
may include a known referral source or a possible upcoming life event that
the patient wants to prepare for, such as a family wedding or a high school
reunion. For the reconstructive patient, the TIR can yield relevant data for a
letter to the referring doctor giving an update on the care and progress of the
patient. It is important to keep referring physicians apprised of the patient’s
treatment and progress so that the doctor will be assured the best care is being
given and will continue to refer patients.
On the topic of referrals, many insurance plans require patients to have a
referral in order to access specialty care. Insurance plans will not reimburse
specialists for office visits which were scheduled without a valid referral. It

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is the patient’s responsibility to obtain this referral. Therefore, it is important to have a patient intake procedure that includes not only a verification of insurance benefits, but also referral requirements. Once this information is verified at the initial telephone call, the staff can then inform the
patient a referral is required. The patient will then have the time to ensure
the referring provider completes the referral and transmits it to the office.
Upon receipt, this referral should become part of the patient’s chart. As
part of the appointment confirmation process, the staff should also confirm
receipt of the referral and verify it is valid for the scheduled visit date. If it is
determined the referral has not been obtained, two days remain for this to
happen.
With referral needs and verification systems in place, patients will be much
less likely to appear for their consult without the referral. Nonetheless, there
are patients who will still arrive for appointments without the proper referral.
In these instances, we recommend the patient be sent to the reception area to
call their referring physician and obtain the referral. While this measure may
sound draconian, it is burdensome and inefficient to have the front desk staff
tracking down multiple referrals for patients while trying to conduct a clinic
day. It can also disrupt the orderly flow of a clinic day schedule.

The Consult
There are a few important components necessary to make a cosmetic consult
successful. The first concept is implemented before the patient even arrives. In
order for a cosmetic patient to be prepared to schedule a procedure when the
consult is finished, they must be adequately qualified. They should be told:







What the procedure will likely cost;
What will happen during the consult;
Educational information on the procedure being considered;
Information about the office and its staff;
Finance and payment options available; and
Recovery and healing times.

The better the patient is informed prior to their arrival, the less time the
patient and the physician have to spend establishing a minimum level of background information. The physician can instead spend consult time focusing
on the individual patient’s needs. This usually provides for a richer consult

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and reduces the number of decision points for the patient. The patient can
then consider whether they:





Are comfortable with the physician;
Are getting a good value for their money;
Feel they will have a safe, predictable result; and
Will like interacting with this physician and the office staff.

While the qualifying information is an important first step, other actions
need to be taken as the patient prepares for and arrives at consult. If the
patient has scheduled the appointment a while ago and the schedule is full,
the staff should have a system in place to maintain contact with the patient to
ensure they arrive for the consult. This system should include an appointment
confirmation two days before the consult. I advise confirming appointments
48 hours in advance to allow patients to adjust their schedule if they have
forgotten about the appointment. Likewise, two-day advance confirmations
allow the practice some time to schedule another patient should the patient
indicate that he or she cannot keep the scheduled consult time.
When the new patient arrives for their consult, they should walk into a neat
and professional-looking office and be greeted by an unhurried and friendly
staff who appear to be there only for that patient. The waiting time should
be minimal, and the movement from reception to consult should happen
quickly. With the advent of managed care, physicians’ schedules have grown in
response to the downward reimbursement pressure. As a result, patients suffer
lengthy waits during most of their interactions with the healthcare system. A
fantastic opportunity exists for the plastic surgery office to differentiate itself
by eliminating waiting times for its patients. Having a clinic schedule that
reflects the value of the patients’ time will be rewarded by word-of-mouth
referrals and happier patients ready to schedule.
During the consult, patients should first meet the physician in a tastefully
decorated consultation room. The expectations and desires of the patient,
procedure-specific details, recovery and healing times, and other relevant
information should be discussed. The physician then excuses himself or herself so that the patient can change into a gown, have photographs taken, and
prepare for the physical exam. The physician then returns and conducts the
physical exam. Many surgeons do not take pictures at the time of the consult
unless doing so helps the patient make a buying decision.
While the patient is getting dressed, the doctor can discuss the recommended treatment with the patient coordinator, including a recap of the discussion with the patient, the procedures proposed, and any other information

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the patient coordinator needs to prepare the price quote. The coordinator
should prepare the quote and find possible surgical dates before meeting with
the patient. Once the quote is shared with the patient, objections are addressed
and financing options (if indicated) are discussed. Statistically, about 20 percent of patients schedule surgery at the time of their consult. Since the vast
majority do not schedule at consult, your practice must have systems in place
for a regular follow-up with patients after the consult. One-day and one-week
post-consult phone calls improve surgical scheduling. There are significant
data demonstrating that if a patient has not scheduled within seven days of
the consultation, they are four times less likely to schedule.
In the interest of business process management and correction, many practices elect to use post-consult surveys and questionnaires to shape and adjust
their office processes in order to maximize the patient experience. This valuable feedback can help improve the effectiveness of pre-consultation paperwork, office contact, patient service, and the actual consultation. A truly
evolved practice listens to its patients and makes the necessary changes to
improve.

Surgery Deposits and Prepayment
The most valuable resource any surgeon has is his or her time. Before allowing a patient to schedule this valuable time, a scheduling deposit should be
required. There are multiple methodologies regarding scheduling policies, but
the amounts are mostly irrelevant. More important is the patient’s demonstrated commitment to the procedure and the surgery date. The deposit
amount can vary; some practices require a fixed amount such as US$500 or
US$750, while others require amounts ranging from 10 to 25 percent of the
total surgical quote. The practice’s financial policies should clearly outline to
the patient that the deposit is non-refundable, with only extreme exceptions
justifying a refund. If a patient elects to cancel surgery and reschedule outside of a certain time frame, we recommend carrying the deposit forward and
applying it to the new date. An example might be a patient calling three weeks
before surgery to cancel and reschedule. In this case, it may be permissible to
carry the deposit forward to the new date. Usually, this allows enough time
to fill the opening on the surgical schedule with another case.
Nonetheless, there is a date after which the surgical deposit is no longer
refundable under any circumstances. At approximately 10–14 days from the
scheduled date of surgery, the office should require payment in full for the
surgery. Cash, a bank certified check, and credit cards are all acceptable forms

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of payment. If the practice accepts personal checks, adequate time should be
given to allow the checks to clear the bank, and verification should be made
that there are sufficient funds. It is exceedingly difficult to collect surgical fees
after the surgery has been completed.
If a patient financing company is used to finance the surgery, certification
of the patient’s credit approval is necessary to move forward. Most finance
companies will verify approval and intent to fund the surgery.

Revision Policy
In order to provide the best patient experience and surgical outcomes, revisions are a necessary component of cosmetic surgery practices. A revision
policy should be created and given to the patient at the time of quoting. The
policy should list a finite number of revisions in order to keep the surgeon’s
time efficient as well as reduce the associated expenses related to performing
revision surgery. The spectrum of revision policy is wide, with some practices
offering unlimited free revisions while others charge slightly reduced surgical
fees and supply expenses. Regardless of the policy, the quality of the ultimate
outcome and the patient’s satisfaction are the goal. The revision policy is more
for those patients who seem inconsolable with regard to surgical outcomes
and less for those who may need a slight scar revision to be happy. Common
components of a revision policy may include the following:
• Free revision must be within one year of the original date of surgery.
• The practice may want to pass through the cost of supplies if the revision is
done under local anesthesia.
• If the case is done in a facility not belonging to the physician, it may be
necessary to further define the financial policy of the facility regarding the
cost of supplies and anesthesia.

Financial Controls
Practice finance
Nowhere is it more important to have reliable systems in any practice than
in cash handling and finances. Funds flow in and out during the operation of businesses, and retrospective reports are created to monitor this
flow. These reports are commonly known as profit and loss statements or,
to use the appropriate accounting verbiage, income statements. Profit and

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loss statements are historical documents many business owners use to evaluate their financial performance for some previous period, be it the previous month, quarter, or year. They are the foundation of a practice’s financial
measures.
The quest to have accurate and useful financial statements begins with
the bookkeeping function within the practice. As revenue is received and bills
are paid, most commonly the practice uses an accounting program such as
QuickBooks®. The diligence and attention given to the initial setup of the
financial software goes a long way to ensure the relevance and accuracy of data
you will be able to access later. Important to any financial management system
is a comprehensive chart of accounts. This is simply a list of line-item categories
of revenues and expenses within the practice. The establishment of the chart
of accounts is also where many practices go wrong. A chart of accounts needs
to be concise, simple, and relevant to the data the physician owner will need
to evaluate the financial performance of the practice. A recommended chart
of accounts is included below.
A sample revenue portion of the chart of accounts may look like this:
Patient Revenue — Cosmetic/Self-Pay
Patient Revenue — Insurance
Skin Care Revenue
Product Sales
Service Sales
Laser
Botox®
Restylane
Ambulatory Surgery Center (ASC) Revenue
Patient Refunds
A sample expense portion of the chart of accounts may look like this:
Labor
Clinical Salaries
Administrative Salaries
Billing Office and Reception Salaries
Aesthetician Salaries
Contract Labor and Other
Payroll (P/R) Taxes, Benefits, Workers’ Compensation
Advertising and Marketing
Answering Service

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Association Dues
Bank Fees
Dues and Subscriptions
Equipment Lease
Gifts and Flowers
Instruments
Insurance — General Liability
Interest Expense
Laboratory
Laundry and Linen
Legal and Accounting
Meals/Entertainment
Medical Supplies
Clinic Supplies
Botox
Restylane
Other
Meetings and Travel
Miscellaneous Expense
Office Expense
Office Supplies
Parking
Payroll Service
Photography
Postage and Delivery
Rent
Repairs and Maintenance
Taxes and Licenses
Telephone
Transcription
Utilities
Total Operational Expense
Pre-Compensation Margin
Physician Discretionary Expense
Physician Salaries
Physician Benefits and Payroll Tax
Malpractice Insurance
Total Physician Expense
Net Income

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The flow of money
Money arrives at the practice in multiple areas. Cash and checks are received
by the front desk or the patient coordinator in the form of copays, surgery
deposits, and cosmetic surgery prepayment for cosmetic surgery. Checks arrive
in the mail from insurance companies and patients. Electronic transfers are
delivered directly to the practice’s bank account from credit card merchant
services, insurance companies, and government payers like Medicare and
Medicaid. If the practice operates a surgery center or a medical spa, funds
are also received there. It is important to have a system in place to ensure the
money is:
• Properly recorded;
• Properly deposited; and
• Properly accounted for in the financial system.
In a perfect world, the physician owner of the practice would be present
to receive every cash payment, check, and credit card received. The reality is
that there must be delegation to trusted office staff to receive and properly
care for the money. Simple systems can be created that provide control and
verification of the proper handling. Most practice management systems allow
for the creation of encounter forms (charge sheets) with unique numerical
identifiers. An encounter form should be created for every transaction that
occurs within the practice. Examples of such transactions may include:









New patient visits;
Follow-up visits;
Post-operative visits;
Surgical procedures;
Local procedures;
Skincare treatments;
Skincare consultations; and
Skincare product sales.

By documenting each and every interaction with a patient and tracking
it by a unique identifier, the practice may reconcile these transactions at the
end of the day by verifying what should have been received from each visit
versus what was actually received. Most systems either track encounter forms
automatically or provide a report of encounter forms issued for any period of
time. The physician can use this report, derived independent of staff actions,
to reconcile the day’s events.

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Each day, the appropriate designated staff member should compile the
encounter forms and the receipts for the payments relating to these encounter
forms, and summarize the day’s activities in what is called a daily close. The
daily close is a compilation of all encounter forms created for the day and
the associated payments and receipts, all summarized into one batch. It is
from this batch that the physician or office manager may reconcile the activity in the daily close with the expected activity derived from the practice’s
encounter form tracking report. Special care should be paid to encounter
forms that are missing, incomplete, or lacking a corresponding receipt when
one is expected. Credit card batches should be closed at the end of every
business day, and checks and cash deposited either at the end of the day
or first thing the next morning. If deposits are held overnight, a reliable
safe should be installed in the practice for keeping the funds until they are
deposited.
The person in charge of making bookkeeping entries should use the
daily close to enter the receipts into the appropriate revenue categories in
the practice’s financial system. It is important to apply tremendous diligence
to this process, as it will ensure that the control of funds is tight and will
make reconciliation with the bank statement at the end of the month much
easier.
At the end of each financial period, a bank statement is usually issued from
the practice’s financial institution. It is imperative that the statement be opened
by the physician owner or other staff who does not write checks or pay bills.
This ensures that the statement is first analyzed by someone in the practice
who is not in a position to embezzle funds. Once a review of the statement
and canceled checks has been conducted, the statement may be forwarded
to the bookkeeper for reconciliation in the practice’s financial system. The
reconciliation should be done as soon as possible after receiving the account
statement. This allows for discrepancies and errors to be corrected before too
much time passes and memory fades.
If a practice uses QuickBooks®, the application provides excellent systems
for recording bills and invoices as they arrive. Each day, as the mail is opened,
bills can be entered into the system and set to the appropriate terms of that
vendor. This allows for control of the cash flow by timing when bills are due
and subsequently paid. By following this process, if the office manager or
physician needs to predict the practice’s cash demands in the future, a simple
aging report is available at the click of a mouse.

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Human Resource Systems
After years of advanced training, multiple tests and board exams, and years of
late nights on call doing the “grunt work” of medicine, the days of private
practice finally arrive. While the years of preparation almost guarantee one’s
chances of success in the operating room, they do not begin to address the
critical elements needed for success in business.
Quite simply, there is no more important decision that can be made in
the creation of a plastic surgery practice than hiring the staff to work in it.
The staff answers the calls, schedules the appointments and surgeries, fields all
manner of questions, accepts the money, orders the supplies, pays the bills, and
supports the physician owner. The following are some basic rules in hiring,
developing, and retaining the office staff.

Applications and interviewing
At the hiring stage, it is paramount to first determine the practice’s needs
when selecting potential candidates to interview. While everyone’s personality is different, there are some personalities which are better suited to the
dynamic environment of a cosmetic surgery practice. Sorting these personalities and accompanying skill sets will be a career-long challenge. The first step
in this process is the employment application — a generic and objective document allowing for an “apples-to-apples” comparison of applicants’ experience,
employment history, expected salary requirements, and previous employers.
Find a standard form and use it consistently in your practice. When qualified
candidates are identified, schedule an interview.
The interview is the best chance for a potential employer to evaluate a
candidate’s personality, demeanor, presentation, and knowledge. This is often
the point at which most hiring mistakes are made. Unfortunately, most people
spend a great deal of the interview time talking about the practice and the
position the candidate is considering. While no one challenges the importance
of clearly outlining the responsibilities of the position, critical time is lost which
could be used to better understand the candidate. The time spent describing
the position should be limited within the context of the larger interview. The
majority of the time should be spent asking the candidate questions in order to
gauge their personality, views towards patient service, and organizational skills,
as well as in-depth questions regarding their previous employment history.

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Typical red flags in an interview can come both verbally and non-verbally.
Some common negative behaviors and warning signs can be detected in the
interview stage. Examples may be:
• Late arrival for the interview. Will they show the same disregard for the time
of the patient and the surgeon?
• Unkempt or unprofessional dress. The business of plastic surgery is truly an
image business. It is important that the staff understand the need to dress
appropriately, depending on the situation. What is more important than
an interview? If the candidate cannot attend an interview with a professional appearance, how can he or she be expected to come to work dressed
appropriately?
• Never smiling during the interview. What does this convey? Universally, a
smile is welcoming and friendly. The ability to transmit this warmth and
comfort will be important when competing for cosmetic patients.
• Being misleading or indirect regarding previous employment and the reasons for leaving. Certainly everyone has bad experiences in the work environment; however, the ability to overcome these experiences and learn from
them is necessary. If a candidate has a questionable employment history,
extra attention should be given to checking references.
The preceding list outlines some of the more common red flags. There
are a multitude of others. To list them all would consume a book itself! Just
as there are characteristics indicating less desirable candidates, there are also
characteristics capable of predicting success in the practice. Some of these
include:








Being punctual;
Presenting a professional appearance;
Smiling when you meet them;
Having good eye contact and body language;
Speaking and communicating well;
Feeling comfortable when speaking to a superior; and
Showing indications of organization.

Did they make their bed this morning?
After over 10 years of managing hundreds of employees in a plastic surgery
office and the related ambulatory surgery center and medical spas, I have
learned that there is one characteristic which is universal among successful
office staff: they are organized. This goes beyond keeping their appointments

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and being on time. This level of organization borders on obsessive and is
typified by the statement, “I would rather do it myself than trust anyone else
to do it.”
The challenge is to find a way to recognize this characteristic during
the interview. Obviously, a candidate cannot simply be asked if they are
organized. Undoubtedly the answer would be “yes”. Through polling various high-performing employees, one common thread was that they always
made their beds. Realizing this fact, I began to incorporate the question
in my interviews. The response is telling and usually consists of one of the
following:
• “Of course! [Indignant] I make my bed every day.” This is good.
• “Umm, not today but I normally do.” This is OK, but they may not be
truthful.
• “No, I don’t make my bed.” This is bad.

Of course, there are exceptions to every rule. There are great employees
who have never made their beds and horrific employees who have always made
their beds. However, this test has, over the years, proven to be a fairly reliable
rule of thumb.

References
It is critical to verify and evaluate the potential staff members being considered
for hire. Some previous employers only give limited information, such as the
hire date, the termination date, and whether or not the candidate is eligible
for rehire. Others give more information. The more information obtained,
the better. Previous employers can be tremendous sources of information on
how an employee performed as well as on their strengths and weaknesses.
In some cases, for additional expense, background checks can be conducted. Of course, this needs to be disclosed to the candidate. In a typical
background check, criminal history as well as credit reports can be obtained.
In situations where significant money will be handled, it is advisable to check
the candidate’s record. Physician practices are commonly embezzled from in
the form of cash, products, and other materials.
With the advent of social networking sites such as Facebook and MySpace,
a new dimension of employee verification is possible. While the individual’s
profile page may be restricted, many are not. A good bit of information may be
obtained from these sites to support a hiring decision or to confirm a decision
not to hire. These sites support the other factors under consideration; decisions
should not be made solely on this medium.

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Hiring and training
Assume the perfect candidate has been found. A formal offer of employment
should now be made. This consists of a simple offer letter outlining the job
description, the employment terms, wages, and benefits. The start date should
be included along with any special considerations agreed upon in the interview.
A place for the employee to sign should be provided, and this letter should be
the second item added to the newly created employee file after the employment
application.
When the employee arrives for the first day, what happens? If the practice
is like most physician offices, the employee will complete the tax and payroll
paperwork. They may be given an employee manual and be shown how to
clock in and out. The new employee is then likely paired with an experienced
employee who gives them a primer on the use of the practice management
system, and off they go. This brief introduction often results in a frustrated,
low-productivity employee. Some will quit; others will struggle through the
difficulties, operating at a solid level of mediocrity, and then quit or, rarely,
excel.
In order to retain and develop employees into true human assets in the
practice, processes must be in place to maximize their potential. The most
effective businesses have systems to integrate a new employee into the office,
establish expectations, and train employees on the desired procedures and
policies. This process begins with a well-written employee manual. The legal
aspects of an employee manual vary from state to state, but the core policies
and procedures outlined should be easy to create. The manual should outline
the following areas of office protocol:










Punctuality standards;
Dress code expectations;
Office surgery policy;
Vacation and sick policy;
Progressive discipline policy;
Work rules;
Computer and electronic media policy;
Benefits; and
Holiday schedule.

A well-written employee manual begins the integration process and establishes the core structure in which the office operates. However, it does not
address the day-to-day functions of the employee in their new role. In order

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to address those functions and provide the best opportunity for the employee
to develop, a thorough position description and training guideline should
be used. The position description establishes the foundation on which the
training program is based. The training document accomplishes dual functions. The first goal of the document is to explain in detail the specific office
functions required of the particular position. Secondly, it creates expectations
and performance measurements for the position. This latter component is
important because it establishes a baseline of accountability for the position
and for the employee.
Now the essence of a management structure has been created. Expectations and performance guidelines have been established, and the employee
is aware of them. A tool is now in place to ensure accountability within the
position. It is now up to the owner and the management of the practice
to enforce this accountability and address shortcomings through additional
training or progressive discipline.

Discipline and terminations
Unfortunately, structured employee discipline and work improvement programs are rare in smaller physician practices. Practices both operate with, and
accept, mediocrity until a tipping point is reached. At this point, employees
will leave or ultimately be terminated.
If handled properly, there should have been an extensive amount of time
and money invested in the hiring and training of any given employee. To
protect this asset and ensure the investment is not lost, a logical progressive
discipline policy should be established in the employee manual and used in
the office. Progressive discipline is simply a standardized set of steps used to
address negative office behavior, deviation from policy, and poor performance.
An additional benefit of using a progressive discipline policy is the creation of
solid documentation that may be used as a defense for challenging unemployment claims as well as a foundation for a legal defense should a terminated
employee decide to pursue legal action for wrongful termination. A simple
progressive discipline policy may include the following:
• First policy violation — verbal warning. The verbal warning should be a
formal discussion with the employee in which the policy breach is clearly
explained to the employee. The proper course of action and expectation for
improvement should be outlined so that the employee understands clearly.
Additionally, consequences for failure to improve should also be articulated.
It should be noted in writing, in spite of the name; the discussion should be

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documented, dated, and signed by the employee. The warning will become
part of the employee’s permanent employment record.
• Second policy violation — written warning. The written warning is second
in the sequence of progressive discipline. It should be noted that this is a
second violation of the same office policy. Once again, the breach should
be explained clearly, be stated in writing, and reference the previous verbal
warning. Steps for improvement should be clearly outlined, along with the
consequences for failure to improve. At this stage, the consequence may be
articulated by the language, “Failure to improve may result in additional
disciplinary action up to and including termination.” Expectations have
clearly been established, and failure to improve at this point means that
the employee is either incapable of or unwilling to improve their behavior.
There are two options from this point forward.
• (Optional) Third policy violation — probation. In some instances, it may
be desirable to offer a “third strike”. Probation provides an objective, last
chance for improvement. Quite simply, the employee is informed in writing
that, for some specified period of time, any further violation will be grounds
for termination. Usually, if an employee has made it to this stage, their
destiny is a done deal. It is just a matter of time. I like this third stage
of discipline because it provides for a truly defensible position regarding
unemployment and legal exposure.
• Final violation — termination. After two to three violations of policy, it
should become clear that the employee is not improving their behavior.
Inevitably, it is in the best interest of the office operationally and financially,
as well as for staff morale, to terminate the employee. If a clear progressive
discipline policy is in place, it should not be a surprise to the employee
when they are terminated. In fact, experience shows that when a progressive policy is in place, many underperforming employees will simply leave
after having their behavior documented. Should they make it through the
entire evolution of the discipline policy and continue to fail, the termination
becomes a perfunctory process.
Terminations should always be done with another trustworthy staff member. Ideally, it should be done at the end of the day in order to reduce the
disruptions to the office operations and other staff members, and to preserve a
little dignity for the terminated employee. There should be no display of emotion, no negotiation, and no blame. The process should very clearly involve an
outline of the policy violations without discussion, the result (termination),
and a thank-you for the service. A trusted employee should also escort the

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terminated staff member to their workspace to collect their items and return
any office property they possess. Any passwords, keys, and other proprietary
office property, be it a physical object or organizational knowledge, should be
returned or captured. Examples may include the processes for filing payroll,
logging into the time clock system, and accessing bank accounts.
It is never enjoyable to terminate an employee; unfortunately, it is a necessary event in the management of a business with employees. It is human
nature to feel bad, and if you are indeed human you will feel bad. Avoid the
overpowering need to negotiate and justify your decision with the departing
employee. The time for this discussion was well before the problem reached
this stage. You will be doing yourself and the employee a favor by keeping
all emotions, sympathy, and justifications out of the termination discussion.
A simple statement of fact, the outcome, and a departing wish of good luck
are all that is really needed. If you wonder whether you made the right
decision, simply ask yourself, “Will the practice be better tomorrow without this employee?” If the answer is “yes”, then the correct decision has
been made.

Inventory Controls
In a structured and well-run business, systems exist to keep operations efficient while defining, in a stepwise fashion, what actions should be taken and
when. As more and more plastic surgery offices increase product inventories
of injectables, skincare products, and other high-value items, inventory management and tracking systems need to be in place to follow the items and to
ensure that they are being properly handled and sold for the correct price.
The importance of a formalized system cannot be underestimated. Products
are given away or stolen every day in physician offices around the U.S. A formalized system, no matter how rudimentary, enforces policy, physical counts,
and general awareness of the flow of material through the practice.
Basic inventory starts with a simple formula:
Starting Inventory + Purchases − Sales = Ending Inventory.
A simple Excel spreadsheet, as shown in Table 1, can be created and kept
current with a few minutes’ attention each week. In order for this tool to be
truly effective, a physical count needs to be made periodically to verify the
expected inventory level. Discrepancies should be noted and explained by the

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Table 1.
Item
AHA
Tretinoin
Sunscreen 4 oz
Sunscreen 2 oz

A simple inventory spreadsheet.

Beginning Inventory Purchases Sales Ending Inventory
12
16
7
8

6
9
6
10

9
10
3
12

9
15
10
6

staff responsible for maintaining the items. If problems persist, disciplinary
action may need to be taken.
Once the system is in place and the staff is comfortable with the process,
some additional enhancements can be added to the tracking sheet. An example
of this is given in Table 2. Any variance, positive or negative, as noted in the
two entries with question marks, should be investigated and accounted for
immediately. The appropriate responsible staff should be informed and also
held accountable for the variance if it remains unexplained.
It is amazing what a simple inventory system can do to preserve the highvalue products in a medical office. The staff who is aware that the practice is
watching the inventory is less likely to lose track of where it is going.
Not all items need to be tracked and recorded through a formal inventory
system. The intent is to track those high-value items which are considered to
be critical items.

A special word about injectable inventories
The prevalence of injectable items in the practice is increasing. As the population ages, lower-cost injectable treatments allow more patients to access
these treatments without having to commit their resources to surgery. This
trend is likely to continue, thereby increasing the necessary inventory levels
of these items in the cosmetic practice. Combining increasing inventory levels
with sloppy or non-existent inventory controls is a recipe for disaster. If all
the plastic surgery practices in the U.S. were to audit their injectable usage as
compared to their injectable purchases, it would not be surprising to find that
a majority have products missing or otherwise unaccountable.
For those practices that do not currently have an inventory system in place,
a quick mathematical calculation can be conducted to determine if the product is being used properly. The calculation is simple; let’s use Botox® as an
example.

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Beginning
Inventory

US$9.41
US$17.99
US$3.46
US$2.99

12
16
7
8

Ending
Purchases Sales Inventory
6
9
6
10

9
10
3
12

9
15
10
6
Total

Value
US$84.69
US$269.85
US$34.60
US$17.94
US$407.08

Physical
Count

Variance

9
14
10
5

0
1
0
1

Reason
??
??

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AHA
Tretinoin
Sunscreen 4 oz
Sunscreen 2 oz

Cost

A more detailed inventory spreadsheet.

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Table 3.

Botox® log.

Date

Patient

Provider

1-Jan
10-Jan
12-Jan

PURCHASE
Doe, John
Doe, Jane

Dr. J
Dr. J

Units

Waste

Units on Hand

85
30

15

1,000
900
870

• Let’s assume the Botox® cost per 100 units = $500, or $5 per unit.
• The practice has Botox® purchases for the last 12 months amounting
to $75,000.
• The practice reports Botox® revenue for the last 12 months of $151,000.
The audit would look like this:
• Total Botox® units purchased in the last 12 months = $75,000/$5 per
unit = 15,000 units.
• If the practice sells Botox® for $14 per unit, the expected revenue on the
sale of 15,000 units would be 15,000 × $14 per unit = $210,000.
• Assume 10-percent waste and no free product was earned through purchase
rewards; the practice could expect a net revenue of $189,000 from Botox®
sales.
• Given that there was $151,000 of Botox® sales and no dramatic change in
inventory levels, the practice is “missing” 96 vials of product, amounting
to $48,000 of lost revenue.
While this example is extreme, it happens more than anyone can imagine.
A simple solution is to implement a modified inventory procedure much like
a controlled substance log. A simple injectables log may look like the example
shown in Table 3.
The log should be reconciled daily, weekly, or monthly, depending on how
closely the practice wishes to monitor the product.
Case Study: What’s Your Two Ounces?
Some time back, I was preparing to open my second restaurant. An interesting debate began regarding the weighing of portion sizes and the practicality
of doing this in real time. The concept for my second restaurant was different
than that of my previous restaurant. While my first was a full-service, broadmenu restaurant, this new one was a casual, high-end fast food franchise.
The key to any franchise’s success is the ability to deliver consistent product
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(Continued)
and service. If you question this, you have never been to more than one
McDonald’s!
In my case, the standard portion size for an order of French fries is five
ounces. In order to address the consistency issue, the franchise had a crude
method for measurement of this five-ounce portion size. A nicely rounded
pile of fries in a #10 paper boat (tray) approximated five ounces. This was
a quick and dirty method for measuring the portion size in the heat of
battle. The restaurant’s drive-through window made the speed of the order
preparation and the delivery to the customer a primary concern. Many existing owners of this franchise argued that the time for their kitchen crew to
weigh the fry portions would cost valuable time. This argument had some
validity, given the importance of speed and of keeping drive-through times
low. Studies show that a five-second reduction in a drive-through time can
increase restaurant revenue by 1 percent.
The key issue being missed was the fact that, when tested, the average
crew member was overportioning the fries by an average of 2 ounces. Rarely
would a crew member ever underportion. This was great for the customer
in terms of value, but very poor for the franchise in terms of consistency,
and for the owner in terms of food cost.
You might think, “What’s an extra two ounces?” Well, I set about to take
a scientific approach to this problem:
1. How much extra time would it take to measure every order of fries?
2. If we did not measure and ran the risk of overportioning, how much
would it really cost us in the long run?
Upon testing, the extra step of dropping the fries onto a properly calibrated
kitchen scale and then onto the plate took an extra two seconds for an
experienced crew member. So, the argument of time became a moot point.
I now turned to the cost of not weighing and what that extra time was worth.
On average, the restaurant prepares 485 orders per day. On some days,
orders run as high as 600; and on slower days, orders are as low as 375. Using
the 485 orders as a baseline and considering that approximately 350 orders
required fries, if we did not weigh the fries and we risked overportioning,
we would send an extra 700 ounces of fries out the door every day!!! These
700 ounces equate to 43.75 pounds of fries per day. With a case of French
fries weighing 30 pounds and costing US$16.80 each, the daily cost was
US$24.50 per day. Taking into account the restaurant is open 360 days
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(Continued)
each year, the cost of not weighing would, at a minimum, cost us US$8,820
annually.
More importantly, if we were to assume that we could have sold the lost
French fries (considering the opportunity cost of the waste), the numbers
become very powerful. Eight ounces of fries sell for US$1.99. The costs are
astronomical at roughly US$174 per day or US$62,685 annually.
This cost was essentially waste and resulted from inconsistency. It was a
no-brainer. We were going to weigh our fries.
I estimate, over the four years I have had this restaurant, that I have
sent over US$35,000 to the bottom line that would not be there if we
had not weighed the fry portions (or close to US$250,000 if we consider the opportunity cost)! Certainly not all the “saved” fries would sell
at retail, so the number more reliably lies somewhere between US$35,000
and US$250,000.
Now you ask yourself, “What does this have to do with practice management?” Just about every physician practice, ambulatory surgery center, and
medical spa has its “two ounces”. Whether it is various consumable supplies in the clinic, sterile supplies opened and not used on the back table
of the operating room, or products and injectables given away or wasted
in the medical spa, without systems and policies to address and track the
use of supplies in the world of healthcare management, it is a near certainty
that there are supplies of value walking out the door which will never be
reimbursed.
A real-world example occurred in an ambulatory surgery center I know.
One of the physicians insisted that sutures be opened on the back table
in order to improve his speed and efficiency in the operating room. In his
view, the process of asking for the suture and then waiting as the circulator
opened the package took too long. In reality, the process added about five
seconds to the case. However, the cost of pre-opening the suture and then
not using it ran at roughly US$25–US$40 per pack of suture per case. Simple
arithmetic applied to this practice alone: the surgeon, who performed 400
cases annually, was yielding a value of US$12,000 of wasted suture each year!
Clearly, the compounding nature of the same supply being used the same
way over and over again makes the economics of inventory management a
worthwhile endeavor. Small episodes of inefficiency, repeated multiple times
per day, every day that the practice is open yields a powerful argument for a
defined process in just about everything a practice undertakes.

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Enhancing Both Practice and Career

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Developing, Establishing,
and Operating Your Own
Surgical Suite
Gordon Merrick

S

ome surgeons see owning and operating their own operating room (OR)
suite as a dream, while others see it as a nuisance or even a nightmare.
For those who see the “dream”, this chapter can provide some guidance in
pursuing that dream and some insight into the process.

Why Develop Your Own Surgical Suite?
Depending on where you practice, the impetus for developing your own operating suite may vary, but many reasons are universal, such as (1) convenience
of scheduling; (2) cost savings over using a hospital’s or another surgeon’s
OR; (3) control of turnover time; (4) control of quality of care, choice of
instrumentation, and equipment; and (the most common) (5) time saved by
avoiding travel to and from another surgical suite. With your own operating
suite, you can start operating at 7 am, dictate and see a post-op, make a few
phone calls, and then return to the OR for the second case. This time saving is
essential in today’s environment. Other benefits include the ability to return
to the OR for unexpected occurrences, such as a hematoma, or to schedule a
revision without scheduling conflicts or expensive OR time.
In some states, reimbursement by insurance for covered procedures is a
huge incentive. One plastic surgeon in California complained to me (just after
he got his OR going) that his OR was paid more for a breast reduction than he
was; then, he realized what he had. Reimbursement can drive the consideration
of building a surgery suite. If facility reimbursement is a motivation to build an
OR, then one must consider which accreditation agency to use and whether
to seek Medicare deemed status.
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Which Agency to Use for Accreditation?
There are several considerations when deciding which accreditation agency
to use for your facility’s approval. The big three are the Accreditation
Association for Ambulatory Health Care (AAAHC) (www.aaahc.org), the
American Association for Accreditation of Ambulatory Surgery Facilities, Inc.
(AAAASF) (www.aaaasf.org), and the Joint Commission (www. jointcommission.org). In California, there is also the Institute for Medical Quality (IMQ)
(www.imq.org), which is related to the California Medical Association.
In choosing an accreditation agency, consider three things: reimbursement, paperwork, and physical facility. There are also credential and personnel considerations. Which agency you use depends upon your reason(s) for
seeking accreditation (see “Why Be Accredited?”). See Table 1 for a basic
comparison of the agencies.

Third-party reimbursement
If 25 percent of your cases are reimbursable by third-party payers, and your
state allows reimbursement for unlicensed surgical facilities, you should consider either the AAAHC or the Joint Commission. If the number of your
reimbursable cases is above 33 percent, you should seriously consider Medicare
deemed status as payers are pushing more and more for Medicare approval for
the facilities that they reimburse. Medicare deemed status refers to Medicare
certification through one of the big three agencies instead of through your
state Health Department. Please note that although you may see only one
Medicare case per year, you can benefit greatly by receiving Medicare certification. The AAAHC and Joint Commission have been around the longest
as agencies that inspect multi-specialty practices and facilities, and insurance
companies recognize them more than the other agencies. In California, Aetna
and other payers are requiring all facilities they reimburse to have received
Medicare approval. At the time of writing, the California Assembly Bill 832
(Jones), requiring a “minimum” of Medicare approval, was revised and pushed
to Committee for further review. No matter what the outcome of that bill, the
writing is on the wall: regular accreditation may not be enough in the future.
If you are going to seek reimbursement for the use of your OR (the days
of billing for recovery room services are gone), you will want to establish a
separate entity (say, outside of New York). If you attempt to seek reimbursement under your practice tax ID, the bill will be rejected since the enriched
global fee that is paid to the surgeon includes the use of the office space.

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Table 1.

Comparison of the accreditaion agencies for OR surgical suite appproval.
IMQ

Yes

Sort of

Sort of

Sort of

Board certification

Yes

No

No

No

Hospital privileges

Yes

No

No

No

Surveyor leeway

No

Yes

Yes

Yes

Timing

Fastest

Slowest

Not Fast

Medium

3rd party
reimbursement

$

$$$

$$$

$

All but AAAASF are not absolute; but
each surveyor expects to see an
RN/PA in charge, not a tech/MA
Board eligibility is okay for all but
Director for AAAASF
All agencies want proof that the surgeon
is qualified. Requirements vary
(proctoring and/or privileges).
AAAASF surveyors can say a lot during
the inspection, but the Central Office
can snap them back into reality
AAAHC can take 90 days to show up for
a regular survey from receipt of
complete application

(Continued)

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Comments

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AAAASF

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Recovery room

Required, but no #
beds
Want separate; but if
flow is good,
combined area is
fine with
“separation”
Not specific

Clean/Dirty areas

Support

IMQ

Physical Facility
Appropriate,
Safe
safe

Safe

Unclear

Unclear

Unclear

Unclear —
leave leeway
to surveyor

Unclear —
leave leeway
to surveyor

Unclear —
leave leeway
to surveyor

Not specific

Not specific

Not specific

AAAASF provides a plan
review service for a
small fee

But, surveyor can ask,
“How do you clean
between cases?”
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Note: RN, registered nurse; PA, physician assistant; tech, technician; MA, medical assistant.
Exhibits : equipment list, OR and recovery room layouts.

Comments

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Joint Comm.

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AAAHC

The Business of Plastic Surgery

AAAASF

(Continued)

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Table 1.

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233

Basically, insurance companies will pay the surgeon more to do a procedure
in the office, since they do not have to pay a facility fee billed by a hospital
or a surgery center. So, if you plan on billing for the use of the OR, establish
a separate entity (LLC, LP, Corp. — your state may require a “professional”
designation), then obtain a tax ID number and a National Provider Identifier
(NPI) number for that entity (see “Billing for the OR”).
Increased recognition does not mean increased reimbursement per case,
but it does mean increased “awareness” by payers; in other words, you will
get paid more often. While a payer that reimburses a facility will not reimburse more based on accreditation or Medicare certification, they may still
pay the center when another, unrecognized accreditation would have yielded
a rejection.

Paperwork requirements
Organizations that are widely recognized by third-party payers are under more
scrutiny and, thus, require more paperwork. Assume that the greater the benefit of the approval, the more difficult it will be to gain approval. I have often
been asked how many hours per day/week/month maintaining the accreditation process takes. Once the structure is established, and the office gets
past the initial ramping-up period, the basic, daily tasks (completing logs and
checklists) should take no more than half an hour of staff time. Most approvals
require the same logs (OR temperature, refrigerator temperature, pathology
log, autoclave log, biological monitoring, etc.). Every few months, credentialing of physicians and licensed personnel must be updated and documented,
since licenses, Drug Enforcement Administration (DEA) registrations, and
insurance expire. While some variances occur in logs and checklists, and some
agencies require much more in terms of medical staff and personnel files (e.g.,
more background checks), these are not regular, time-consuming activities.
The big variables come in quality improvement. In very broad terms, the
amount of paperwork required by each organization from the most paperwork to the least is as follows:
• Medicare — It does not matter which agency you use if you are seeking
Medicare deemed status certification; the Medicare process will increase
the amount of paperwork. Even if it is just because the surveyor has to
go through more paperwork, so he will make sure you also have to go
through more. There are very few specific paperwork requirements exclusive
to Medicare, but there are some (e.g., a backup power log showing testing

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at full load for 30 minutes every 30 days and checking of the fire safety
devices each month).
• Joint Commission — I believe the Joint Commission is really trying to
become more user-friendly and understand the outpatient arena. Some of
their surveyors do not seem to know this, however. In addition to the basics
of quality improvement, credentialing, and complete and accurate medical
records, the Joint Commission adds a few twists that seem logical to some
and ridiculous to others.
• AAAHC — Just an eyelash under the paperwork requirements of the Joint
Commission, the AAAHC is firmly entrenched in the “if you didn’t write
it down, it didn’t happen” camp. Regular quality improvement studies,
minutes of meetings, and gobs of credentials and credential verification
activities are required. The AAAHC requires some specific policies that
may not seem to be a part of your practice or your surgery center (e.g.,
how would you respond to a terrorist attack?) but, if you have read the
standards book cover to cover while taking notes, you will be okay.
• AAAASF — Of the big three agencies, the AAAASF requires the least paperwork. It is creeping up, though, as it wishes to avoid the embarrassment of
unannounced surveys where its facilities do not match up with either State
or Federal inspectors. For those states requiring accreditation, an unannounced survey is always a possibility. Do not need the stories of yore regarding the laxity of AAAASF surveys. While the AAAASF has not aggressively
sought recognition by third-party payers, it has worked well with states that
require accreditation.

Physical requirements
The accreditation agencies are not very clear about physical requirements
for the surgical areas. The Joint Commission and AAAASF provide a little
guidance, but not much. Most states either have their own very prescriptive requirements, or they adopt the guidelines of the American Institute of
Architects (AIA). Do not listen to those who tell you that operating rooms of
400 square feet, showers for staff, and step-down areas are required for accreditation or Medicare certification (unless you are in a Certificate of Need (CON)
state). Medicare says very, very little about the physical facility. People often
confuse surgery center approval standards, and apply state license requirements
to Medicare certification and accreditation. However, outside of the AAAASF,
surveyors are given large amounts of leeway in how they interpret the physical
standards.

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All the agencies and their surveyors want to see a space that has some logical flow to it. They are interested in (1) patient privacy (not only when talking
about their surgery, but also when walking down a hallway with their backside exposed); (2) infection control (vague air conditioning requirements, low
traffic flow past the OR, no dragging of hazardous waste bags through patient
areas, one-way flow of dirty instruments from washing to wrapping to sterilization); and (3) awareness of patients’ fear and trepidation (pre-operative
patients should not walk past recovering patients to get to the OR nor should
bandaged patients be escorted to their car in a wheelchair in view of the waiting room). The Joint Commission and AAAHC use words like “adequate”,
“appropriate”, and “safe”. The AAAASF has a limited guide for those facilities
that are sites for doing surgery, including:
• Seamless flooring in the OR with 4-inch self-coving;
• Washable ceiling in the OR (“hard lid” of sheetrock or washable tiles are
acceptable, either mylar or vinyl-covered drywall);
• 4 feet around each side of the table (rolling carts do not count as obstructions as they can be moved to allow emergency personnel around each side
of the bed in an emergency); and
• Separation of clinical areas from surgical areas. Assume that there must be a
door to the surgical area which includes the OR, recovery room, sterilization, and janitorial areas. No consult rooms, exam rooms, doctor’s offices,
or lunch rooms should be within the surgical area.
Remember, there are no standards anywhere that tell you the basics of
space planning for a surgical suite. Just because someone else you know got
away with having their bathroom double as the sterilization area, it does not
mean that it is okay. Be observant if you work in another surgeon’s officebased surgery suite, and note down what you like and do not like. Check out
more than one. Assume that the surgeon whose office you are observing did
the same thing and tried to trim down the amount of space required, cutting
corners where possible. Do not assume you will be able to cut more corners;
instead, focus on improving flow and making your space work for you while
considering patient, staff, and purveyor flows (e.g., Where will deliveries be
dropped off?).
Then there is Medicare. There are two ways to educate yourself, your
contractor, your architect, and your engineers about the physical requirements for Medicare certification. You can find the form that Medicare and
AAAASF inspectors use when surveying a surgery center for compliance
with Medicare guidelines. It is known as the CMS2786R, and you can find

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it at http://www.cms.hhs.gov/cmsforms/downloads/CMS2786R.pdf/. The
other way is to purchase the Life Safety Code checklist from the AAAHC. The
standards include the following:
• The building in which the surgical suite is housed must meet minimal firerating standards. The suitability of the building depends on how many floors
the building has and which floor will house the surgical suite, among other
things. Fire sprinkles are required on every floor. If the surgical suite is on
the first floor, the building must be rated a minimum of a Type V — 1 Hour.
The rating becomes more stringent the more patients may be “incapable
of self-preservation”, and the higher up in the building the surgical suite is
located.
• Physical separation (at least a one-hour firewall) from the surgical suite to
any other occupancy, including your office, the place upstairs, and the office
downstairs.
• Autonomy of the space. That is, the Medicare-certified center, including the
waiting area and the sterilization area, cannot share any space with another
facility. Some surveyors balk at having a telephone/computer within the
walls of another tenant (a neighbor who happens to be you, usually), so be
sure to allow enough space for those items in the surgery area. Assume that
the Medicare surgery center will have multiple owners; it must have a lease
just like any other tenant. If you must use some of your own office space
for the surgery center, set up a lease for that space. It sounds silly, but you
are dealing with the Federal government. Also see “Physical Requirements
for a Medicare Surgery Center”.
• Difficult electrical requirements, including a Type 1 essential electrical system (EES) for those who wish to perform procedures utilizing general anesthesia in their OR. This is, without a doubt, the most painful part of the
physical process at this point, as engineers, architects, and contractors often
disagree about the interpretation of the codes and often do not agree with
State codes. The code states that there must be a generator, but currently
there is a waiver to allow battery emergency power. No one knows if or when
that waiver will be removed. Just because you were approved five years ago
does not mean that you will pass once the code has changed. Separate electrical panels are required for different functions, and the cost of changing
the panels — before construction — can be more than US$10,000.
• Nurse call system (pull chains at each recovery room bed and bathroom
with an annunciator panel at the nurse station).
• Other (e.g., tracheostomy set).

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State License
If you decide to be so bold, a state license for your ambulatory surgery center may be in the works. The difficulty of obtaining a state license depends
on whether you practice in a Certificate of Need (CON) state. Briefly, the
CON was created to protect hospitals. The process includes submittal of many
documents (lease, architectural and engineering plans, environmental effect
reports, etc.) before you receive initial approval. Then, notices are sent to the
local governments, and the hospitals can argue against the development of
the new center if it will negatively effect their bottom line. If there is capacity available (open OR time), the hospitals will successfully argue against the
new surgery center, saying it will harm the hospital, which in turn will harm
the community because emergency services and gratis services will need to be
cut, etc.
In a CON state, a significant investment is required just to make the submittal to the regulating Board. Several surgeons who can bring substantial
volume and can make an initial investment must form a significant critical
mass before the decision to move ahead can be made.
If you are in a state without a CON, there are usually very succinct and
detailed guidelines regarding the construction of the center, including large
ORs, lots of sterilization space, many bathrooms, etc. Many states without
their own guidelines defer to the guidelines of the AIA. The AIA requires large
ORs, step-down areas, exam rooms, and other space-eating requirements.
California has relatively mild architectural requirements, but its mechanical,
plumbing, and electrical requirements are “simplified” versions of the hospital code.
Obviously, state license regulations vary from state to state, and you need
an expert to help you determine whether you and your proposed space can
meet those requirements. Sometimes this can be an architect, sometimes a
general contractor or, most often, a surgery center consultant. Make sure you
are fully informed of the state’s requirements before you sign a lease, purchase
property, or dive into the CON process.
In California, as of April 2009, a state license for ambulatory surgery centers is not available after the Department of Public Health bowed out of the
process due to a court loss. However, there is legislation being considered
which would require all outpatient centers to be at least Medicare-certified,
if not licensed. This would mean bringing back the licensing process, but the
legislation has not yet determined who would do the inspections, when they
would be done, and how they would be paid for.

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Approval Terms
Know the difference between accreditation, certification, and licensure. Only
the State can license your facility. Only Medicare can certify your facility. The
Joint Commission, AAAASF, and AAAHC can provide accreditation for your
office and facility. The Joint Commission, AAAASF, and AAAHC can also
provide Medicare deemed status certification if your facility (not your office)
meets the physical and administrative requirements. If your State requires
accreditation of offices that do more than local anesthesia, your office may
receive accreditation and be State-approved, but that is not the same as being
State-licensed. So if you are accredited and if an insurance company asks for
your office’s license, the only license you may have is your business license.
Medicare deemed status certification is the program that allows surgery
centers to obtain Medicare certification through accreditation agencies rather
than through the local Department of Health. The deemed status route is
more expensive than regular accreditation, means more work for you and your
staff, includes more stringent physical requirements, and, for the most part,
takes longer from the receipt of the application by the accreditation agency
to the day of the survey. Medicare surveys are unannounced, so scheduling
them requires patience.
In some states — New York, for instance — how you refer to your space
makes a difference. New York is a CON state and, with legislation that took
effect in July 2009, prohibits office-based surgery practices from calling themselves a “center” (as in a surgery center), “facility” (as in a hospital), or other
related terms. Payers insisted that they were confused by office-based surgery
facilities that called themselves a “center”, assuming they were CON-approved
facilities. Now the State has very stringent requirements for naming these practices if they are other than the physician’s name. So, in addition to the state’s
control of the naming of your office, your policies and procedures must reflect
your state’s preferences and requirements.

Development/Construction Recommendations
If you are going to build from scratch, build a suite that can at least be accredited, since states are headed in the direction of requiring accreditation (there
are other reasons to be accredited listed below). If you can afford to take on
the financial responsibility of additional space, pursue Medicare certification

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(if you are not a CON state). If you are seeking reimbursement for the use of
your OR, be aware of the payer environment, as many payers are now requiring
Medicare certification for all surgery facilities to whom they make payments.
If you have a reasonable number of reimbursable cases that you perform each
month, you should consider designing a suite that meets Medicare guidelines.
Medicare certification may also be an insurance policy against future regulations which may require Medicare certification for facilities seeking reimbursement or for those performing procedures under intravenous (IV) sedation or
general anesthesia.

Differences Between Accreditation and
Medicare Deemed Status Certification
The upside to Medicare certification is reimbursement for use of the facility.
The downsides include the upfront expense for construction, the long-term
rental expense of increased square footage, and the slight increase in staff
paperwork to fulfill Medicare requirements.

Physical requirements for a Medicare surgery center
Unlike an office-based surgical suite which will integrate the waiting area, the
doctor’s office, the OR, the recovery room, and the exam rooms, the Medicare
surgery center is a “single-use” facility where only one thing happens: surgery.
So, the Medicare-certified suite has its own waiting room, its own sterilization
area, its own recovery room, its own janitor’s closet, and its own OR which is
not used by or connected to an adjacent office practice. The Medicare center
can be separated by a firewall from an office practice or other occupancies,
but dirty areas such as a corridor cannot open straight into the OR. There
are no written size requirements for Medicare certification. Just like AAAHC
accreditation, the regulations use terms like “adequate” and “safe”. Your state
may have requirements, but not Medicare. So if you are doing only light
sedation and only blepharoplasties, you do not need a 225-square-foot (15′ ×
15′ ) operating room. But if you are doing surgeries requiring armboards,
general anesthesia, lasers, or liposuction machines, you may need a larger
room. Similarly, there are no guidelines for the number or type of rooms
or the size of the support rooms. That does not mean you can do what you
want; you must still please the surveyors who may work in larger, well-designed

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spaces. Here are some basic tenets to follow, especially if you are pursuing an
accredited facility:
• Operating room — Assume that, with general anesthesia, you should start
with a basic 225 sq ft. Do not assume that a 22.5′ × 10′ room will do.
Be reasonable and be aware of the details. The AAAASF standard of 4 ft
around each side of the bed is a good place to start. Anesthesia machines,
video towers, and lasers take up a lot of room.
• Recovery room — Do not assume that an exam room will be a good size for
a recovery room. Stretchers are usually 30′′ (with rails up) × 78′′ , and do not
turn on a dime. To accommodate patients being discharged on a stretcher,
leave enough space to move the stretcher around and to move things around
the stretcher. The recovery area must also have a nurses’ station, where
Schedule II–V medications can be stored in a double locking cabinet; forms
can be kept; and records for ordering, invoices, and supplies can be stored.
You may or may not need a privacy curtain around the stretcher. If you
do, make sure it is fire-retardant. Having a door from the recovery area to
the public corridor or exterior is very desirable, so that recovering patients
do not get pushed past nervous patients awaiting their procedures in the
waiting area.
• Janitor’s closet — This is often forgotten, but you must have a way to
clean up your center. A fire-rated room with a rated door and walls and
a ceiling with automatic closure must be created to house a janitor’s sink,
a mop, and a mop bucket. The mop must have extra heads and one mop
handle designated for OR use only. Try to allow enough space to store your
biohazardous waste (usually in a 30-gallon trash can). That way, all your
very dirty, hazardous stuff is in one place.
• Clean/Dirty utility area(s) — Neither Medicare nor the accrediting agencies require that a facility have a separate room for each function. There
can be one room for washing, rinsing, preparation, wrapping, and sterilization of instruments. Ideally, the flow of the room should be one-way,
with everything eventually crossing back into one room. Speak with your
scrub technicians and nurses to make sure that adequate space is allotted to
perform each function. The AAAASF requires a physical separation of clean
and dirty areas, but this can consist of a Plexiglas divider with signs indicating which side is which. Always keep your dirty area smaller than your
clean area. To allow maximum storage, nothing should be stored in the
dirty room except dirty equipment and soiled, bloody items. In the clean
room, you can store sterile packs, sterile supplies, etc. Know what kind of

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sterilizer you will want. If you are planning to use a tabletop unit, make
sure that upper cabinets are not directly above the unit and that you have
a ceiling fan above the sterilizer to prevent false alarms from your smoke
detectors and/or sprinkler heads.
Waiting area — You must have a separate waiting area for your center’s
patients. Do not count on the benevolence of your surveyor allowing you
to use your practice’s waiting room for your center. Even if you do not see
patients in your practice on Tuesdays because you are in surgery all day, your
surveyor may ask, “What if someone else uses the Medicare-certified center?
Will you limit them to only working on Tuesdays?” The size of the waiting
area is not specified, so use that to your advantage. If you expect to have
a maximum of two people in the waiting area, make a very small waiting
area. There is no requirement for a receptionist in the waiting area. Small
Medicare-approved centers have had just two chairs in the waiting area. The
room can be equipped with a buzzer that the patient presses upon arrival.
The pre-operative nurse can then open the locked door to greet and escort
the patient to the pre-op area. If you will be seeing workers’ compensation
patients, consider a larger area. Remember, you do not make money in the
waiting area and you have no need to impress patients at this point, since
they have already chosen to have their surgery with you.
Storage — I have never seen a center that had too much storage. No, it does
not make any money, but it will ensure that your center works efficiently
and effectively. Storage is necessary in the clean area, and space must also
be available for purveyors to drop off their dirty boxes. One mistake many
people make is not providing an area for dirty boxes to be dropped off,
as they cannot be stored in any clean or sterile area. The hallway is not
appropriate because the boxes would block a fire exit. Consider an unused
area of the recovery area, especially if a door designed for patient discharge
from the recovery room leads to the exterior.
Flow — One-way flow is always the best. Just as in the clean/dirty area, the
entire center should have a one-way flow so that there is no crossing back
over for patients. The flow should allow patients to go from check-in to
pre-op, then to the OR to the recovery room, and finally to get discharged
from the recovery room (patients can walk or get wheeled by recovering
patients, but it is not best; privacy curtains can at least prevent pre-operative
patients from seeing recovering patients, but it is possible for them to hear
occasional moaning).
Air-conditioning requirements — Medicare (nor accreditation) has no
specific requirements for the air-conditioning system, even for the OR.

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However, your city or your state may have its own regulations. The best —
and most expensive — designs include a HEPA filter and humidification.
The AAAASF requires that the OR stay between 68◦ F and 72◦ F, and most
states require a separate air-conditioning unit for the OR to ensure proper
air changes and good infection control. If litigation ever occurs, you will
feel more comfortable knowing you have a system that is similar to what
free-standing surgery centers have.
• Medical gas — Piped medical gases (in-wall) are not required by any agency
or by Medicare. Side tanks in the OR are permissible, as are E tanks of
oxygen at each bedside in the recovery room. Piped gases are very expensive,
but much more attractive than side tanks and portable suction units. The
standard requirement is that there be oxygen and suction available for each
bed, including pre-op beds. Shared suction and oxygen is not permitted,
since this arrangement would not allow coding or suctioning an OR patient
and a recovery patient at the same time.
• Space for backup power — For accreditation, the uninterruptible power
source (UPS) is acceptable. Currently, the Centers for Medicare and
Medicaid Services (CMS) has provided a waiver to allow UPS battery systems instead of generators, but that waiver may be pulled at any time. All
agencies but the AAAASF require 90 minutes of backup power to be provided to patient areas for the monitors, lights, surgical table, anesthesia
machine, etc. The AAAASF requires 120 minutes of backup power. Your
electrical engineer will respond to your prepared equipment list, which
should include the voltage and amperage of each item as well as which
equipment will be on the backup power (not everything has to be). This
information will determine the size of the UPS required. Smaller UPS units
are economical when compared with generators. However, large UPS units
(more than 12 kVA) are less cost-effective than generators. Note that if you
do not give the engineers an equipment list, they can make up whatever
they want and you are then at their mercy. They have been known to plan
for only about 80-percent capacity of true needs. Therefore, plan that all
the equipment will be on at the same time for the full 90 minutes. You must
get the equipment under control; otherwise, a large portion of your budget
will go to a gigantic UPS.
If you are able, plan for a generator (propane, diesel, natural gas). Usually, a
generator takes up about one parking space due to required clearances around
the unit. Do not forget to plan for the generator when you are planning
the space for your surgery center, because your city may have restrictions

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on where it can go. Furthermore, some building developments may have
made agreements with the city regarding how many square feet (or minimum
percent) of the development must be landscaped, and the generator may cut
into that landscaping. Your city will have minimum parking requirements for
medical business occupancies (usually about five spaces per 1,000 square feet),
and the generator will take up one of those spaces.
Many fire departments do not allow generators to be installed on roofs
due to the difficulty of getting fuel to them. Some do not allow natural gas
generators, some do. California requires that you apply for a generator that
has been approved by the Air Quality Management District (AQMD). In
addition, you or your staff must obtain approvals and signatures from local
residents and businesses to install the generator within a certain distance of
any schools.
Some new projects will not have the option of a generator, as the city may
require that things like the building’s elevator be on the backup system. This is
an example in which a UPS system would be cost-prohibitive when compared
to a generator.
Despite the difficulty, if you have the option, go with the generator for
the extra added “insurance”, knowing that a generator meets state licensing
regulations and the Life Safety Code, and that any future code revisions will
not negatively affect your center.

Why Be Accredited?
Recognition of quality
The benefit of marketing as an accredited office has lost some of its cache
because patients are not that aware of the requirements and the difficulty of
obtaining the approval. Still, it is a nice seal of approval, which can help with
risk management.

Risk management
If something should ever happen with a patient, having the seal of approval can
be beneficial. Accreditation is another shield which can protect you from prying attorneys’ fingers. Accreditation can provide your practice a layer of validity
and protection, and show that you and your staff have a habit of providing
quality patient care and attention to detail. On the flip side, not having accreditation when your colleagues in the area are accredited can be problematic.

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Imagine an attorney challenging your infection control techniques, but your
office/facility has a policy and procedure in place with documented staff training, logs of each load and their contents, and a log of your weekly biological
testing. In addition, at regular intervals you have had an inspector walk
through your space to ensure compliance with hundreds of other standards.
You have mounted a significant defense without uttering a single word.

State requirement
More and more states are requiring accreditation for those offices that provide
anything more than local anesthesia. When California first adopted this regulation (AB 595, which became Health and Safety Code 1248), many physicians
tried to skirt the gray line by saying, “The patients breathe on their own and
are awake and alert.” California’s law was distilled as this “If you yell fire, can
the patient walk out?” If not, you had to be accredited. In New York, the
law is much more specific and even provides a limit on the number of cubic
centimeters (cc) you can aspirate during liposuction. If your state requires
accreditation, you have no choice. If the state-adopted effective date has not
yet arrived, do not procrastinate as you may have to postpone surgeries if surveyors are not available before the deadline. Note that the effective date of your
accreditation is not the day you apply, and it may not be the day of the survey.

Reimbur$ement
Reimbursement is the icing on the cake for some and the main impetus for
others for developing a surgical suite. Reimbursement for surgical facilities can
be significant, although less significant than in past years. Although there are
the odd cases where reimbursement is substantial (5–10 times Medicare), most
payers are looking at 100–150 percent of Medicare as the reimbursement for
most procedures (see “Establishing A Fee Schedule”). If breast reconstruction
or hand surgery is a big part of your practice, reimbursement should be a
motive for developing a surgical suite. As discussed in the “Which Agency
to Use for Accreditation?” section, careful consideration must be given to
your payer mix (HMOs, PPOs, Medicare, and cash) and your volume before
thinking of reimbursement as a motive for developing a surgical suite. As
stated previously, you may almost never see a Medicare patient to benefit
from Medicare approval as many payers are requiring Medicare certification for
those facilities they reimburse (Medicare requires seeing one Medicare patient
every six months to keep a Medicare number active). If reimbursement is your

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primary focus (because of your volume of third-party reimbursable cases), you
must consider Medicare certification.

Tenant Improvements (TIs) vs. Free-Standing
Building
When you have made the decision of creating your own surgical space, the
next question is whether to find a medical office building and then lease the
space and build out the suite, or to seek a long-term investment and build
your own building. The two biggest differences are time and money. A brand
new building (de novo to surgery center developers) can provide a good longterm financial return while ensuring that your landlord treats you well. The
benefits of owning real estate need no embellishment. If you find a location
that allows for your space and the potential for additional, income-earning
space, even better. There are some rare opportunities that arise whereby an
existing free-standing building can be converted to a surgical space. The major
concern of the existing building will be the presence of fire sprinklers and the
parking requirement for medical use in your locale. New facilities must meet
the Americans with Disabilities Act of 1990 (ADA) access requirements, of
course.
The downsides of a de novo free-standing building are the upfront hurdles
and the long-term upkeep of the building. The biggest upfront hurdles are
time, time, and time. The design process will take three times longer than you
think … and that is just for the shell. If your city has an architectural review
board, be prepared. If/when your exterior is approved, you and your team
must ensure that there is limited impact on street traffic flow, the natural habitats of spotted owls, etc. Of course, on a long-term basis, you, as landlord and
landowner, must keep up the building including the parking lot, landscaping,
roof, stairwells, and common areas.

Growing the Business
If you are located in a state where reimbursement for unlicensed centers is possible, think about bringing in other physician-users. If you have developed a
Medicare-certified center, this is much more likely to be an option and should
be one of the reasons you develop a surgery center. There are many states that
keep a close eye on who uses the center. Some states require that all owners be

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physicians, some say all physician-users must be owners, and some say both.
With a Medicare-certified center that has its own waiting, recovery, and discharge areas, it is much more likely that other physicians will show interest in
your space. If other physicians fear that their patients will perceive that they
are going to your surgery center, other physicians will most likely not want to
use your center or participate in its ownership.
The benefits of bringing in other physician-users can be significant. While
you are vacationing in Cancun, for example, your partner could be performing
a week’s worth of cases that could pay for a significant portion of your vacation. The downside is that the space is no longer your own sandbox to do with
as you wish. So, with increased income-earning ability comes some democracy (depending on how you structure your entity and who gets to vote on
matters such as capital equipment purchases or construction improvements).
Other physicians, even those who practice in your specialty, may want different
sutures, different equipment, or different staff. Be prepared to make decisions
based on economics and experience (theirs as well as yours), not on emotion.
And, of course, be prepared to compromise.
There are entire seminars held on the subject of selling “shares” (sometimes called “units”) in a surgery center. The most important issue in determining a share price is risk. Obviously, the earlier someone becomes involved
in the development of the center, the more risk they take and the lower their
price should be. Theoretically, the physician who joins you in the venture
while in the design phase should (not “must”) pay less than the physician who
joins the project when the center is ready for business, who in turn should pay
less than the physician who joins when the center is breaking even.
Setting the share price is as much art as it is science. The easiest way is to
add up the cost of the construction plus the cost of professional fees (architect,
lawyer, CPA), plus the cost of equipment plus the operating capital required
to float the business until it can support itself; then, divide that number by
100 and that is your price for 1 percent of the business. Do not gouge. The
money is in the use of the center on a long-term basis, not on the sale of
shares. Yes, the price of shares must be high enough so that, if the physician
loses that money, it will hurt. But, you do not want to scare away the new
surgeon in the area who is building his or her practice but is business-savvy.
Be reasonable in setting the share price and how much control you think you
need. If you have several physicians who show interest, do not be afraid to
sell a good portion of your shares if it means that you can make money off
those hard-working, quality surgeons. A legal structure may be established
that allows for voting control while having minority interest.

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Equipment Considerations
You must know early on what your plans are for equipment, as the engineers
must decide on the electrical and heating, ventilating, and air-conditioning
(HVAC) systems that can handle your needs. You will also need to know
if you require 220 V or use a dual headlight vs. a single headlight, if you
want wall-mounted vs. table-top monitors in pre-op and recovery, etc. Do
not assume that the engineers and the architect know the size or the electrical
draw of all the equipment, even if they are experienced. Their level of amnesia
from one job to the next is frightening. Take the initiative and research the
equipment. Take notice of the equipment where you are currently doing your
surgeries. Ask the staff if they like the recovery monitors and ask the anesthesia
providers if they like the anesthesia machine and anesthesia monitors, but
try to spot the prima donnas. Do not assume you must buy the latest and
greatest color monitor and anesthesia machine with the smallest miniscule
footprint.
Always consider refurbished equipment as an option for almost all your
equipment needs. The two areas that tend to be more problematic for refurbished equipment are OR lights and large sterilizers. Other than those two
items, consider refurbished surgical tables, stretchers, monitors, and stools.
Purchase refurbished equipment from someone local or someone who has
been used by one of your peers. Many purveyors will simply purchase a piece
of equipment at a hospital auction, wipe it down, and sell it. You want to make
sure that your provider does testing, replaces parts, etc. As always, if the price
is too good to be true . . . .

Construction Preparation
Just as you should assume that everything will take longer than expected,
assume that each phase of the project will take three steps where you thought
there was one. Equipment needs guide the requirements for electrical and
HVAC specifications. Once the space has been chosen and found to be appropriate, the design phase begins. Being prepared is essential to a smooth and
timely process. The following steps will help:
1. Prepare a wish list for your rooms. Give your space planner/architect an
idea of how much space you need, what functions you want to cover, and
how busy your practice will be. Put all the things you want to include,

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such as a spa room, laser room, aesthetic room, private shower, etc. Start
with all the things you want and let your professional decide what can
fit in. Preparing the list before you look will give you a better idea of how
much space you will really need, which may be different from what you
had hoped you would need. While you are looking for a space, you can
have the space planner/architect look to determine if your wish list will fit
(they will eventually charge for these visits).
2. Prepare an equipment list for the surgical area. Once you have found the
space and have finalized the design, the equipment list will help the designer
and the electrical and HVAC engineers. Engineers want to design a system
that will not fail, so they will want to know all the functions that will take
place with the equipment, their electrical draw (in amps), and their voltage
(almost everything is 110 V in the U.S., but you never know if any of
your equipment will be an exception). Providing a layout of the OR and
recovery areas can maximize the efficient use of your space (later on, you
will need to indicate where you want power outlets to be placed; do not
leave it to the engineers or architect).
3. Consider colors. It may not be surprising, but this aspect often takes the
longest time of any of the preparations. Get your spouse, or significant
other, or — be smart — hire an expert to avoid relationship disaster. If you
are in the aesthetic business, your office must reflect an aesthetic awareness.
Unless you are a born artist with color and texture awareness, do not be
afraid to invest in a professional who can guide you. If nothing else, an
expert will provide you with resources and will open your mind to different
options.

Choosing the Key Players
• Realtor — Surprisingly enough, the realtor can play an important role in
finding the right space and can open up your options.
• Architect — Often the architect is the first person you will choose besides
the contractor. This can be the most important person on your team. With
the right architect, you have an advocate who can stand by you throughout the entire development. Many architects will see you through the
entire construction process, while others will leave you hanging during
the construction. Some architects assume that they are done when they
complete the drawings. Some follow through by making construction site
visits to ensure that the contractor will follow what the drawings say and

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not make strange assumptions. It is worth it to pay extra for the right
architect who has surgery center experience and who will see you through
at least part of the construction process. If they do not know surgery centers, architects and engineers can double the space and double the budget by specifying hospital-type air conditioning, plumbing, and electrical
equipment.
• Engineer — The engineering team, usually chosen by the architect, is
extremely important and must have experience with surgery facilities. If
they design to the stricter State standards for full-blown multi-specialty
surgery centers that do total knee and spine work, you will spend thousands of dollars too much. The engineering team draws out the electrical,
plumbing, and HVAC systems. Do not assume that they know what they
are doing or that the architect knows what to tell them. They often do
not verify simple things like the height of the ceiling. This may not seem
important until they tell you your OR ceiling must be as low as 7′ 6′′ for
clearance for all the ductwork. Incidentally, if you must have a low ceiling
(e.g., you are in New York on garden level), consider a bonnet for your surgical light. You can run the ductwork around the exterior of the room and
leave height for a real surgical light that you will not hit your head on. You
can do the same thing in hallways by running the ductwork where height
is not as important. Humidification is important for the OR.
• Contractor — This team member is perhaps second in importance only to
the architect. The contractor can often even cover mistakes that the architect
and engineers have made, but they can also magnify the mistakes of the
engineers and architect. Do not use your brother-in-law or the guy who did
your patio cover. Experience matters with surgical spaces, but experience
with hospitals does not mean that the contractor will be good with a surgery
center.
• Consultant — This is a big question: do you hire an accreditation/
certification consultant or do you go it alone using a nurse who has been
through a few surveys? Experience from many physicians says make the
investment, but be careful. Picking the wrong consultant may mean he/she
recommends the wrong architect, who in turn recommends the wrong contractor and engineer. An experienced and honest consultant can work with
a less informed architect and contractor to steer them away from oversized generators and 8-foot hallways, male and female staff showers, etc.
Passing the accreditation and Medicare survey is more than just paperwork; an experienced consultant can assist in choosing the right location
or the right building prior to making a significant investment. Many a

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project was downsized after the fact because the physician brought in the
accreditation/certification consultant after the building was purchased or
the shell completed.
The order of involvement is usually as follows:
1. Real estate broker — Unless you have found the magical space while wandering the streets, you should find a broker who knows what a surgery
center is, knows that sprinklers are required for most uses, is familiar
with medical parking, and knows simple ways to discharge patients in a
wheelchair.
2. Architect — In an existing building, the architect designs the space. If the
project is de novo, the architect designs the building.
3. Engineers — The engineering team tells the architect what he or she forgot
as they design the electrical, mechanical or HVAC, and plumbing systems.
These people are very important; do not ignore them. They can cost you
lots of money or save you from disaster.
4. Contractor — We all know the horror stories of change orders, so good
planning is essential and good architects and engineers are crucial, or you
will hear the dreaded phrase, “It’s not on the plans!” repeated many times.
The contractor should provide a bid only after the engineered drawings
are complete; otherwise, the contractor is bidding blind and guessing at
requirements. Always get more than one bid, even if your best friend is the
perfect contractor with years of experience. Sometimes people miss details,
and if you do not catch those oversights early, the change orders to fix it
are costly.
Somewhere in this process, there is usually an accreditation consultant,
nurse, and/or equipment consultant/purveyor. The consultant can save you
money by keeping the engineers from overdesigning for non-existent equipment (like planning for 220 V when not required) or from assuming that the
equipment draws much more power than it actually does (which causes the
“requirement” for a larger backup power unit). The consultant can also inform
the engineers and the architect about the difference between state licensing
(which requires 400-square-foot ORs and staff showers) and accreditation
(which does not). The consultant can also help in the design of the space
so the accreditation/certification inspector does not tell you that physical
changes must be made, e.g., you must rip up that travertine you had shipped
in from Malta to allow for a new door (the AAAASF has a space plan review
process which is quick and inexpensive). Consultants do not have licenses,
only clients, so check their references.

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Timeline and Milestones
For a TI project, the tasks that must occur include the following. The
information that is pertinent to a new building is included in square
brackets.
1. Locate a suitable building/space (consider issues such as exiting, fire rating,
visibility). This will likely take weeks. [For a new building, it will likely
take months.]
2. Choose the accreditation/deeming agency (this may be the #1 task if
Medicare is involved). This will take one week once you have chosen your
priorities. [You should better know this before you find the building.]
3. Design and finalize the space plan. Assume four weeks or less if you are
diligent, or more if you have more than one person making recommendations to the architect. [Add four to six weeks for the shell design, and
more if you have an Architectural Review Board in your city.]
4. Prepare the construction documents (after you have provided an equipment
list to the engineers). Assume four weeks. [Assume six to eight weeks plus
more if the city rejects the exterior.]
5. Submit the plans to the city for approval. Assume four weeks for TIs.
[Assume six to eight weeks for new buildings plus soils work, environmental impact, etc.]
6. Begin construction. Assume 13–18 weeks for standard TI work with no
major structural issues or change orders. [Assume three to nine months
for exterior work, then add the TI time.]
7. Purchase equipment. Sometime after TI work begins, start getting readyto-order equipment. Make decisions on the equipment as soon as you can
and be ready for lots of people to provide alternatives. Assume six weeks
for delivery of new equipment. Refurbished equipment is sometimes difficult to get if it is a hot item, but can often be delivered the next day if
available and if the purveyor is local (C-arms were impossible to obtain
in 2007–2008 due to problems GE had). Timing is very important, since
you do not want expensive equipment getting damaged or stolen at the
construction site.
8. Recruit staff. If you are not moving from a current location to a new
spot, and if you have not located your clinical staff, you cannot begin
planning too early. Keep in touch with staff who you have worked with
and thought to be competent. You do not need to hire them when construction begins, but do not wait until one week before your survey
date to panic and hire a registered nurse who told you she had gone

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9.

10.

11.
12.

13.

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through an accreditation process once at the hospital. If you respect
their opinion, get them involved in some of the planning of the surgical
areas as they may provide insight that your architect cannot, especially
in regard to patient flow as well as outlet and light switch locations. Try
to get your nurse or scrub technician involved with the design of the
instrument area.
Get your application in. Do not wait until you are ready to open your
doors to send in your application, as you will be left waiting with bills
for rent, payroll, loan payments, etc. All agencies have a time limit for
the applications, so do not send them when you have located the dirt
lot for the parking. The AAAHC takes about 12 weeks to show up for
surveys, while the AAAASF and Joint Commission are a little faster. If
you want a survey to be done soon after you have completed construction, get the paperwork in early. Note that Medicare paperwork is filed
separately, so if you are considering Medicare certification, you can send
that in a little earlier than the accreditation paperwork as the accreditation agencies may want to see a copy of the Medicare paperwork.
Some agencies want the paperwork approved before they will schedule the
survey.
Begin accreditation/certification paperwork preparations. Medicare requires that a center have written agreements with ancillary providers
including laboratories for pre-op and pathology, radiology (even if you
do not think you need it), medical waste pick-up, janitorial service, linen,
consultant pharmacy, peer review, hospital transfer, etc. Identify these
providers so that you or your staff can contact them to get the paperwork
in place. It usually takes lots of phone calls, so I recommend you delegate
this. Some providers are not familiar with the process, so you will have to
provide a template for an agreement. Keep it simple. Medicare surveyors
often require back-up documentation for your ancillary providers, so start
making those requests early.
Receive equipment. Do this close to completion, when the space can be
secured and someone you trust is there on a regular basis.
Receive final construction approval. For the AAAHC, this document is
necessary to schedule a survey. Just the final sign-off on the construction
card will do, so you do not have to send a Certificate of Occupancy.
A temporary occupancy approval will also do.
Prepare for your survey. There is much to do after construction begins
and before the survey, so do not assume that you will be ready the day
after you start moving boxes in. There are in-services, fire drills, etc.

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Time Investment for You
Assume that your time investment will be quite significant when starting an
office-based or Medicare-certified surgery center. A rough breakdown follows.
• Broker — There will be meetings where you drive around town with the
broker to find a suitable location. You will have meetings to find the right
space, and then meetings to negotiate and finalize the lease. Even after the
terms of the lease are agreed upon, you will probably meet once or twice
more with your broker along with your attorney.
• City — You may be required to visit the city and schmooze a little. Maybe
the city does not want a medical space in the “perfect” location you have
chosen or there is not enough parking in the lot (you can sometimes get a
variance if you tandem park or have a valet). If you have an Architectural
Review Board, plan on meeting with them and bring the architect.
• Architect — You will have meetings with architects (at least two architects,
please) to look at their work and to see if you can get along with them. If you
must negotiate every agreement, you will meet with them to do that. Then,
there will be more meetings with the chosen architect to get the space plan
correct. Look at your agreement to see if there are limitations on the number
of meetings or iterations the architect will provide, and be aware that, if you
run over that amount, you will be billed. Be fair with them — revisions take
time! Most revisions can be done over fax/phone/email to relieve your
time investment. Then, meet to go over the details and the final version.
Choosing finishes can take a great deal of time and is very important, so do
not put that off or assume that the architect will do a good job. You can
hire a designer who has a good reputation and has improved the design and
feel of other spaces. Having your spouse do the colors is not recommended,
and doing it yourself involves more time than you know or want to invest.
If you care how it looks, hire someone who knows what they are doing.
Assume at least two meetings to choose finishes, no matter if you have a
designer or not. Changes in finishes can be costly, and many high-priced
items have long lead times. If not ordered early, those changes can slow the
construction process and cost you lots of money both in construction costs
and in the loss of potential income by not being able to utilize the space.
• Engineer — You probably will not meet with the engineers.
• Contractor — Once the architectural and engineered drawings are complete, the set of drawings will be sent to contractors for bidding. Get at
least two bids, but do not get more than three, as this can alienate the

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contractors or cause them to lose interest. They will need to visit the site
to verify measurements including ceiling height, the location of the generator and HVAC units, restrictions on parking, etc. You do not need to be
there with them while they measure, but assume that you will meet with
them at least twice. Meet with each contractor at least twice to get a feel
for their knowledge as well as to see if you can get along with them. Once
the construction starts, do not be an absentee owner. If you are building a
brand new building, assume that, you will be having many more headaches
requiring many more meetings. Meet with the contractor on a regular basis
(weekly is good) to get a feel for the progress and to make decisions such as
the placement of outlets and switches along with unanticipated occurrences.
The subcontractors will have questions about locations of things and the
purpose of items in the plans (e.g., “Why is this fan above the autoclave
area?” “So the steam from the autoclave doesn’t set off a smoke alarm and
damage the ceiling tiles.”).
• Equipment — When you purchase equipment, you will have meetings with
the seller, whether it be McKesson or an independent distributor. I strongly
advise against purchasing equipment from an auction or online. These items
are as is. You do not want to have to repair newly purchased equipment
yourself. Leave it to experts. Assume two in-person meetings with the seller,
along with lots of emails and phone calls.
• Consultant — If you are planning to be accredited or certified, hire an
accreditation/certification consultant early in the process (recommended!).
Have them visit the site a few times, first to check on the location’s feasibility, and then during the construction process to see if anything jumps
out (check the agreement and make sure sites checks are in there). The
consultant should meet with you, the architect, the contractor, and the
subcontractors. You will then need to meet with the consultant again in
separate meetings as construction is completed and accreditation preparations begin in earnest. You can delegate much of the paperwork to your
office manager/business office manager/clinical manager. You should be
in contact with your consultant throughout the process, asking questions
that the contractor may relay to you regarding equipment placement, the
size of the backup power, etc.

Billing for the OR
Should I?
The first question is, “Will I bill for the use of the OR?” I say, “Why not?”
Unless there is a state law prohibiting it, and you are doing non-cosmetic

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work that is covered by the patient’s insurance, attempt to be reimbursed for
the expense you underwent to provide a personalized, non-hospital surgical
experience for your patients. Do not rely on hearsay or gossip to determine if
billing for the OR is illegal. I have yet to hear of it being so in any state.

In-house vs. outsourcing?
Billing for the OR is not rocket science, but many dollars are not captured
due to the lack of experience of a biller/collector. So, do not assume that
the office person who does your professional fee billing knows how to bill
for the facility. There are many nuances that an outside expert can provide,
which results in more income, and you do not have workers’ compensation
and health insurance issues as well as payroll taxes to pay with an outside billing
source. The biller/collector is incentivized to collect because otherwise you
do not pay them.

Establishing a fee schedule
There is no longer big money in surgery centers. You do not have to only
bill Medicare rates, but it is a good idea to bill as a multiple of Medicare. Of
course, you do not want to be the tallest blade of grass and be constantly sent
for review. One rule of thumb is a multiple of Medicare. Know that payers
will always ask for “reasonable and customary” fees and ask for a reduction in
fees. Leave some room for negotiation. If you can, see what others in the area
are billing, though it can be tough to get that kind of information.

Establishing a legal entity
If you decide to bill for the surgical entity, you must establish a separate entity.
Most states now require that the entity be a “professional” entity. Many states
take quite some time to approve medical entities that are not “Joe Smith, MD.
A Professional Corporation”, for example. Some states have very particular
restrictions on what can and cannot be in a name for a surgical entity (for
example, New York does not allow “Surgery Center” or “Surgical Center”
without a CON/Article 28).

Ongoing Accreditation
Do not forget to maintain the accreditation effort. If you, the surgeon, the
monarch, do not make maintenance of accreditation requirements a priority,

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you may lose your accreditation. It takes time, effort, energy, and intuition. It
is not rocket science, but it takes a team that sees accreditation and certification
as an honorable goal that has meaning — even if money provides the meaning.
If you, the leader, do not see it that way, you may jeopardize the approval of
your facility and, in some states, remove the ease of utilizing your own OR
through non-compliance.

Rewards
Many know the benefits of owning an OR that is available at a moment’s
notice. The benefits of providing a convenient and safe environment for your
patients can be immeasurable. The time savings for you as the surgeon can
be substantial. If you can receive reimbursement for the cases you perform at
your center, all the better.

Risks
The risk in not receiving accreditation can be fines and a loss of license, depending on your state. If proposed Assembly and Senate bills pass in certain states,
having only accreditation will not be enough — you will need to find a location that is Medicare-certified. Financially, the risk to building an accredited
OR is the cost of the additional floor space, the equipment expense, and the
wages for OR personnel.

Expectations
Do not assume that having your own OR will solve all your woes and double
the size of your practice. Competition is very stiff right now, so if you can
offer a lower OR fee than a competitor because you run your OR efficiently,
you may create a competitive edge. You will not get rich from the collections
from your OR, but it can pay for itself and more, depending on your mix of
cases. Hand surgery cases pay very well, as does all bone work. But, do not
forget that your OR will cost you money to operate.

Summary
The benefits of having an office-based operating suite are not a mystery and
not new. The leap to a Medicare-certified center is newer and requires more

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risk, but provides the potential of more benefit. Many payers are requiring
Medicare certification (or, in the case of Blue Cross, confirmation of a Type 1
EES), and some states are considering legislation requiring Medicare approval.
Be careful, do your homework before you start, and the rewards — both
subjective and financial — can be substantial.

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Publishing in Plastic Surgery
Deepak M. Gupta, MD, Nicholas J. Panetta, MD,
Geoffrey C. Gurtner, MD, FACS
and Michael T. Longaker, MD, MBA, FACS

Introduction

T

he field of plastic surgery has long prided itself on innovative approaches
to disease, which have largely come from the contributions of surgeons
around the world even before plastic surgery was recognized as a unique
surgical subspecialty. Names such as Gillies, LeFort, Tessier, Millard, Buncke,
Murray, Mathes, and Sarnat are household names in plastic surgery today.
Their wisdom has imparted to others much of the basis of modern plastic
surgery. Beginning in the 1940s, Tessier1 outlined novel approaches to address
craniofacial deformities, yet it was not until 1997 that craniofacial surgery
was officially recognized by the Accreditation Council for Graduate Medical
Education (ACGME) as a subspecialty of plastic surgery. Such contributions
have brought plastic surgery to the level of specific expertise that we know
today. So how were these men able to apply their observations from within the
walls of their facilities to fertilize plastic surgery as a field around the world?
How were surgeons worldwide able to learn to correct craniofacial anomalies
without observing Tessier firsthand? How have pioneers of our specialty shared
the modern principles of plastic surgery if they are not here to teach them?
The answer to all of these questions, and the legacy of these founders, lies in
their written works in the form of books, manuscripts, essays, and others. The
publication of their observations stirred curiosity among other professionals
and fueled the evolution of plastic surgery.
Plastic surgery is a relatively nascent subspecialty. Surgery has been performed since before the advent of written records, yet it was not until the
1900s that Sir Harold Gillies, who is commonly regarded as the father of plastic surgery, established the field’s principles for the first time. The evolution of
plastic surgery continues, and we are acquiring new clinical and basic scientific
knowledge and publishing at a rate faster than any other time in history. In
2005 alone, more than 3,000 articles were published related to our specialty.
Not only is the volume of information growing, but so is the diversity of clinical
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and basic science reports — both in content and context — in academic as
well as private settings. Publishing sustains and expands the field.
The growing body of literature provides guidance and opportunities for
individuals at all stages of their careers.2 For the basic scientist, the literature
explains disease at the molecular or genetic level. With parallel advances in gene
therapy, stem cell biology, developmental biology, and regenerative medicine,
disease is being understood at a deeper level than ever before. We stand poised
to change the face of clinical plastic surgery, as did the field’s founding fathers.
For example, lessons used in dealing with difficult wounds were gleaned from
close and detailed examination of wounds in vitro and in a number of in vivo
animal models. This basic science knowledge has helped us to address deficiencies in our clinical approaches, such as in the treatment of non-healing
ulcers, chronic wounds, and debilitating conditions that lower the quality of
life. A great example of this type of translational research is the use of negativepressure wound therapy, which has become a cornerstone in treating difficult
wounds. This revolutionary clinical technology was introduced by Kinetic
Concepts, Inc. (KCI). Negative-pressure wound therapy relies on increasing
blood flow to hypoxic wounds, reducing pressure, drawing out excess fluid and
infection, and clearing cellular wastes. Since its Food and Drug Administration
(FDA) approval in 1995, the vacuum-assisted closure (VAC) device has been
studied in several settings in which wound management is complicated, difficult, and often suboptimal. These settings include burns, composite tissue
loss from trauma, high-grade pressure wounds, diabetic foot ulcers, as well as
wound reconstruction mediated by a skin substitute. Furthermore, Argenta
et al.3 and Morykwas et al.4 have published several basic research reports on
the effects of subatmospheric pressure on tissue. These studies have examined
parameters such as blood flow, granulation tissue formation, mechanical deformation, and tissue factors as well as in vitro cell biology. The authors note that
mechanical deformation can draw fluid out of the interstitial space, shortening
the distance over which growth factors must diffuse. As such, the phenomenon
is familiar to plastic surgeons and underlies de novo composite tissue engineering in the form of tissue expansion.3,4 Scherer et al.5 have also reported that
cell proliferation is stimulated by negative pressure. Furthermore, microscopic
strain was documented specifically in subatmospheric conditions.
The literature also allows surgeons to share their clinical experience in
an objective and meaningful manner. Publications written by clinical practitioners have changed the field of plastic surgery. One example is an article by
Hidalgo6 reporting on the use of the microvascular fibula flap to reconstruct
the mandible after extirpation for orofacial cancer. Segmental mandibular

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defect reconstruction with a microvascular fibula flap was discussed, including
considerations such as shape, bone length, donor site morbidity, and quality
of bone stock. This article has made the microvascular fibula flap a mainstay
for mandibular reconstruction.
Publishing in plastic surgery can fuel improved patient care, optimize efficient surgery, and reduce the biomedical and socioeconomic burdens of disease. However, the expansion of the literature is insufficient by itself to advance
the field, as critics have noted several deficiencies in our publications. Several
reports have detailed the nature of the plastic surgery literature, and regrettably it is largely limited to case reports, anecdotal experience, and other studies that are “low” in their level of evidence. While many of these studies have
made invaluable contributions, plastic surgery as a field is perhaps lagging,
given the overall trend towards evidence-based medicine and, increasingly,
evidence-based surgery. This new paradigm of “best practice” in medicine
and surgery is already affecting patient care and payer policy. The implications
of this trend are potentially significant, and it will be interesting to follow the
evolution of the plastic surgery literature as the field progresses. For now, the
community will continue to rely on contributions from its members, and we
should not forget that everyone has something to contribute. The following
information may serve to rally those who have questions regarding publishing
in plastic surgery.

How to Publish?
The question of how to publish in plastic surgery can be daunting to the
novice. Of foremost importance, publishing is made possible by our peers.
When a manuscript is submitted to a journal, experts in the field are consulted
not only to assess the study, but also to indicate opportunities for improvement. As such, review of our work by our peers assists the editors in making an
informed and objective publication decision; in providing constructive feedback to authors in order to enhance quality; and in maintaining standards
of the journal, the field, and modern science and medicine. Peer review of a
manuscript takes time, effort, and expertise. An effective peer review impacts
editors, the authors, and the evolution of the very field of plastic surgery itself.
Peer review begins with manuscript preparation and the pre-submission
process. During this time, authors demonstrate their understanding of the
scientific method, ponder a research question, formulate a hypothesis, design
methodology, collect data, and analyze their meaning.

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First, a manuscript usually begins with an abstract. It should be a
concise representation of the text of the manuscript, structured to a journal’s
preference. Next, the introduction should establish a logical case and context
for the current study and clearly state the research hypothesis. The introduction should include a brief literature review and touch on the manuscript’s
relevance to the mission of the journal. Overall, the introduction must provide
a basis for why this study is important.
Following the introduction, the methods section outlines the design of the
study that aims to answer the authors’ question or explore their hypothesis.
Of utmost importance in the methods section is the acquisition of appropriate control data, the absence of which can render the study unpublishable.
In this section, the authors establish the study’s validity and reliability and
address confounding variables, such as unique materials, so that the study
is reproducible. Information regarding human and animal subjects should be
clearly stated. Finally, a plan for statistical analysis of the data is discussed under
the methods section. Information can be cited from previous peer-reviewed
reports. This common practice reduces the manuscript length, increases its
readability, and strengthens this section with supporting data from commonly
accepted practices.
The results should be presented clearly. Tables, figures, and other visual
aids can be useful as long as they are easy to follow, logical, and straightforward.
Data are presented in relative or absolute terms, whichever is appropriate.
Actual numbers should be included, if applicable. Too often, authors make the
mistake of stating that “X is significantly greater than Y ” or “X is comparable
to Z” without actually providing the values for X, Y , and Z. The authors
should first present the data and then establish their statistical significance,
where appropriate. Any figure that is used should be formatted according to
the journal’s specifications for size, graphic resolution (dots per inch or DPI),
color or black/white, and file format. Failure to adhere to these guidelines will
prompt a revision. Each figure should be associated with a short figure legend
that describes the data presented in the figure and defines any abbreviations,
arrows or dotted lines, etc. that may be used. The figure legends are listed in
a separate section of the manuscript, usually following the references.
A discussion of the results should follow next. This section revisits, but
does not repeat, the introductory material or results. The discussion should
clearly frame and interpret the main findings of the study, and also assess its
strengths and weaknesses. The discussion should avoid speculation, but clearly
suggest future directions and opportunities for further study.
Finally, a manuscript should include an accurate list of references. This
section should demonstrate consultation of the current literature, but items

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should not be too many, too few, too old, or too obscure. Accuracy is
paramount. Any of these mistakes will prompt revision.
Authors also have other miscellaneous considerations when preparing a
manuscript. They should choose an appropriate title, and disclose potential
conflicts of interest and financial support for the research (e.g., NIH grants,
private funding, etc.). Of course, they also need to be certain that none of the
text is plagiarized.
In considering which journals to submit the article to, authors should consider the readership of each journal and the expertise each journal is looking
for. A journal’s impact factor is associated with its ability to reach a broad
readership.7 Each journal will use this impact factor to guide its peer review
process. For example, Nature’s impact factor varies significantly from that of
Plastic and Reconstructive Surgery, yet the latter is likely the most widely read
journal among plastic surgeons. Authors should consider the novelty of their
work, the applicability of the study, the soundness of their methodology, the
strength of their data, and the target audience when submitting a manuscript
to a particular journal.
In the modern era, manuscripts are largely submitted to journals online
through various systems. Authors should adhere strictly to these guidelines
delineated by each journal. The initial submission of a manuscript includes
completion of copyright and release forms, figures, supporting material, and
other information that is sometimes requested by a journal. Once the editor
has received the manuscript, a tracking number is assigned to it. Usually, this
number is a reflection of the number of manuscripts a journal has received
for consideration during that calendar year. This stage marks the first point at
which a manuscript can be turned down by the peer review process. Editors will
perform an internal brief review of the manuscript. It will be sent to several
outside peer reviewers only if it is deemed worthy of further review. This
decision is based on a number of factors largely determined by a manuscript’s
potential to make a novel contribution to the literature.
Once the manuscript is sent out for review, usually between two and four
reviewers are invited to review the manuscript. They will receive an email that
will allow them to accept the invitation and then guide them to the manuscript
materials. In most cases, reviewers are chosen from within the field, so they will
understand the hypothesis underlying the work and will be familiar with the
model systems and methods. They will be able to judge the quality of the data
and analysis, assess the validity of the conclusions, and judge the significance
of the work.
Peer reviewers provide feedback regarding the manuscript, ranging from
spare comments to lengthy assessments. Peer review is blinded so that authors

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will not be able to learn the identity of the reviewer. This anonymity helps
ensure that the review process will not impact collegiality or ethics. Once the
reviewer has assessed the manuscript for the components described above,
they will provide a specific commentary on the manuscript’s strengths and
weaknesses, including constructive strategies for improvement. The reviewer
will also fill out a rating form provided by the journal regarding novelty, importance, soundness, relevance, etc. Depending on the journal, this rating form
may also contain an area to designate an overall recommendation to accept,
reject, revise and resubmit, or provisionally accept pending revision, etc. The
rating form also contains an area allowing confidential feedback to the editors
for any concerns of conflict of interest, plagiarism, etc.
These feedback items are returned to the authors. In some cases, reviewers
or editors accept or reject the manuscript outright, but usually they suggest
revisions and further review. Revisions can come in different forms. Minor revisions include correction of grammatical errors or inclusion of methodology
minutiae. Significant revision suggestions include requests for additional samples and data points, additional experiments, or consideration of conflicting
published literature. Reviewers may also ask how the study fits into the larger
picture of the field, medicine, and modern science in general. Authors should
not be discouraged by requests for revisions, since reviewer comments indicate
that the reviewers have taken an interest in improving the work and making it
a part of the permanent body of literature. Thus, authors should pay careful
attention to addressing each reviewer comment as the manuscript is revised.
Journals usually have a set window of time (e.g., 30 or 90 days) for making
and resubmitting revised manuscripts. The submission process expires if the
manuscript is not resubmitted by that deadline. In most cases, suggestions
for revisions are not optional for the authors. Failure to adequately address
each reviewer comment will not go unnoticed in further review. The potential
for abuse of the peer review system arises when there is a conflict of interest between authors and reviewers. Such conflicts should be brought to the
attention of the editorial staff. However, in most cases, each reviewer comment
can be addressed tactfully and adequately. Revisions are usually enumerated
in a point-by-point rebuttal letter accompanying the resubmitted manuscript.
Each reviewer comment should be listed alongside a clear response indicating
exactly where in the manuscript the pertinent change was made. Within the
manuscript, the revision should be indicated by a distinct font, often bold and
bracketed or in a different color. Revising a manuscript requires significant
attention and consideration by both the authors and the reviewers, but it is
the essence of peer review.

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Once the revised manuscript is resubmitted with a point-by-point response, it re-enters the peer review process. At this point, it may be accepted,
rejected, or returned for revisions again. Each journal will have its own threshold for revisions. Some journals allow one round; others will allow two, three,
or more revisions.
If the manuscript is ultimately rejected, it may be revised at the authors’
will or it can be submitted to another journal. If the manuscript is ultimately
accepted, it will enter the editorial staff’s publication queue, which can be
expeditious or lengthy, depending on the journal. At this stage, the manuscript
is formatted to the journal’s specifications and the editors may request clarification of manuscript information, such as figure quality, references, correspondence details, etc. These requests are returned to authors in the form of
a galley proof, after which the manuscript gains the status of being “in press”
and is slated for publication in an upcoming issue.
As a final note, when considering in which journal you may want to publish
a manuscript, it is important to submit your work only in serial fashion, not in
parallel. That is, one should not submit a manuscript to multiple journals at
the same time. While this may be a tempting option to increase the chances
that a report may get accepted for publication or to optimize your visibility
and expedite the overall process, one should instead be open to constructive
criticism from the peer review process. Parallel submissions can lead to “double publishing”, do not allow for manuscript improvement as the manuscript
is reviewed, and is not considered an appropriate strategy. Rather, serial submissions allow multiple edits and subsequent review and re-edits to improve
the quality of the work. The serial approach also allows improvement of the
quality of investigation at every step of the manuscript review and publishing
process.

Where to Publish?
Choosing a journal can be a difficult decision. Multi-factorial considerations
that overlap and conflict with one another can be confusing for the novice
author. The choice of journal will largely determine who will read a given
article. For example, Plastic and Reconstructive Surgery is likely to have a
relatively narrow audience compared with Nature. The readership for the
former consists largely of plastic surgeons and residents. In contrast, the basic
scientist will preferentially read the Journal of Biological Chemistry or Cell
rather than Plastic and Reconstructive Surgery to find the latest data on a given

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molecule or in vitro mechanism. Consequently, choosing a journal is often a
strategic consideration. Where will the work be best received, and where will
it be perceived as having the greatest impact? Where an article is published can
also influence people’s impressions of the authors’ abilities. A journal with a
higher impact factor raises the level of regard held for the novelty of the data,
the rigor of methods, and the applicability of findings. Work published in a
high-impact journal is more likely to be considered high-impact work that
will be noticed more quickly by others in the field, potentially changing the
field instantly or impacting the field’s future. High-impact work may also play
a significant role in the authors’ career development, and is often noticed by
academic departments during potential job negotiations as well as by funding
institutions during granting opportunities.
In general, having a tentative target journal in mind and following
its guidelines when preparing a manuscript can save time and energy.
Reformatting a manuscript’s body, abstract, figures, references, etc. to a different journal’s format can be extremely cumbersome and tedious. Some journals accept a variety of manuscript formats. For example, a full-length research
article differs from a short (or brief) communication, and sometimes a rapid
communication can have its unique form. It is important to decide early which
type to submit to the journal to avoid making changes later. Each type has its
advantages and disadvantages.
The majority of research manuscripts that are published are full-length articles describing comprehensive investigations. They usually follow the structure
described above, with introduction, methods, results, and discussion sections.
This standard type of manuscript is the most important form of publication for
authors who come under consideration for tenure or promotion in researchoriented environments such as universities.
Short and rapid communications are less structured and less comprehensive than full-length research manuscripts and should not be the bulk of one’s
curriculum vitae, especially in an academic setting. These types of manuscripts
often contain information that can stand alone and make a significant contribution to the literature, but may combine into one section introductory material, methodology, results, and a discussion. Few journals offer this option.
Often these types of manuscripts are used to disseminate information in “hot”,
quickly moving, competitive fields or when the material may have immediate
implications for public health.
Choosing the type of manuscript and planning ahead during manuscript
preparation is only part of the decision impacted by the choice of where
to publish. Almost every editor provides information regarding the journal,

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including a set of author instructions, the scope and mission of the journal,
and the potential formats in which a manuscript may be submitted. Usually,
this information can be obtained electronically.
Beyond the manuscript type, there are other considerations that go into
choosing the right journal for your manuscript, including language, focus,
availability, reputation, time to print, and nature of its review process.8 Among
these factors, the nature of the peer review process is perhaps the most
important. As a general guideline, the value of submitting a manuscript to
a journal that is not peer reviewed is equivocal. A manuscript is likely to be
widely accepted and readily respected only if it is published in a peer-reviewed
journal.
The focus of a journal is another important consideration. Does the journal
publish only clinical articles, only basic science articles, or both? The journal’s
orientation should be compatible with the goals of the author.9 However,
there is a potential benefit to submitting the manuscript where there is not
an obvious fit. For example, submitting a basic science research paper to a
clinically oriented journal may underscore the potential clinical relevance of
the work.
The reputation of a journal should also be an important consideration.
How is reputation determined? Established colleagues in the field will be able
to identify which journals are regularly read and respected. Most people will
have a short list of high-profile journals and a somewhat longer list of acceptable journals. The acceptance rate of a particular journal is also an important
consideration in determining its reputation.10 Is the journal very selective or
does it publish most of the manuscripts that are submitted? Are the standards
so high that it would likely be a waste of time and resources to submit a
manuscript to that journal? Experienced researchers can help gauge journal
selectivity. The reputation of a journal is also reflected in its editorial board. Are
the editors well-known leaders in their field? The reputation of a journal may
also be associated with the length of time that the journal has existed. Many
journals are launched each year, and only a small fraction of them survive.
Consequently, junior investigators may want to stick with more established
journals, while senior researchers may have less to lose from publishing in
newer journals. Finally, and most importantly, the reputation of a journal is
associated with its impact factor. This number is an annual measure of how
often articles in a particular journal are cited by other authors. The impact factor can be misleading, though.11,12 For example, methods and review articles
are often cited more than primary research articles, so journals that publish
a disproportionately high number of these articles will be cited more often,

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leading to a falsely high impact factor. In contrast, an outstanding journal with
superb quality that serves only a small group of researchers or a relatively small
field (e.g., plastic and reconstructive surgery) will, by definition, have fewer
readers and a smaller audience. The narrow focus of the journal can lead to a
falsely low impact factor, even if all the articles are exceptional in quality and
of great importance to their audience.
Though it may not be obvious to some people, the availability of a journal
is another important consideration when choosing a journal for publication. A
journal that is not easily available to readers is less likely to make a difference
for the authors or for the field. Online availability, library holdings, as well
as personal subscriptions all impact how accessible a journal is. Indexing in
electronic databases like MEDLINE/PubMed (National Library of Medicine)
can exponentially disseminate your manuscript to a wide variety of readers,
authors, and investigators.
While the above factors are important determinants in finding a good fit for
a manuscript, they are not the only ones. Most authors consider a small set of
target journals before expanding their considerations. This set usually consists
of journals with foci that closely parallel an author’s work. These journals may
also be the target journals for an author’s peers, who may then recognize the
work when presented at scientific meetings and symposia.

Who Should Publish and When?
Because plastic surgeons are required to complete a long training course before
becoming attending surgeons, first as medical students, then as residents and
fellows, the question of when to publish is often closely associated with who
you are when you publish.
For the dedicated basic science researcher, the objective to publish is obvious. However, for clinicians and surgeon-scientists, private practitioners and
academics, a common misperception exists that publishing in plastic surgery
may be less critical than it is for basic scientists. For academic surgeons, publishing is critical. Dissemination of one’s surgical practice and outcomes is
paramount when building a reputation, expanding one’s catchment area, and
building camaraderie among peers both within the academic institution as well
as beyond. Not only can publishing attract attention to a specific faculty member, but it also contributes to divisional/departmental recognition. First, the
division/department will automatically be recognized when the manuscript
is published under the corresponding author’s contact information. Second,

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any work that is presented at regional, national, or international meetings
will highlight the home institution from which the work originated. Third,
any awards that the work wins will also be associated with that specific division/department. Fourth, invited lectureships to present this work confer
recognition on the division/department of which the author is a faculty member. Publishing in academic plastic surgery is also associated with promotions along the tenured faculty member track. Typically, a number of years is
required to move between assistant professor, associate professor, and professor positions. Having a body of published work is a testament to an academician’s clinical expertise and facilitates peer recommendations and promotions.
Publishing can also establish one’s expertise in a particular area, which can lead
to invited review journal articles, book chapters, and invited commentaries.
Furthermore, publishing can increase the number of clinical referrals which
an individual may receive, as others recognize an author’s expertise.
For the plastic surgeon in private practice, publishing can achieve many
of the same objectives as described above. In short, publishing can help to
distinguish oneself from others. Private practitioners often prioritize businessrelated considerations without realizing that publishing can fertilize business
growth and development, although it may not be obvious. A private practitioner depends on practice volume for livelihood and business survival. It is
possible for publishing to increase that practice volume. Scientifically sound,
reproducible work with favorable results can fuel the growth of one’s practice.
Publishing can bestow a private practitioner with clout that can be advantageous when a number of surgeons are competing. This is true in both
reconstructive and cosmetic surgical cases. Published private practitioners can
quickly capture a niche market in a competitive environment.
Residents, fellows, and medical students also have an opportunity, as well
as a responsibility, to publish in plastic surgery. Often, these individuals are
the “laboring oars in the water” and can drive the process with guidance and
mentorship from their attending surgeons. Opportunities to publish are valuable for trainees, the faculty, and their training programs. Trainees benefit
from a mentored experience as they begin to establish themselves within the
field of plastic surgery. On a more advanced level, publishing provides a platform for contributing innovative solutions that may serve the rest of one’s
career. The community of plastic surgeons is relatively small and, given the
long course of training, they are likely to cross paths with each other more
than once. Publishing can foster camaraderie in these scenarios, and can help
to stratify candidates for faculty positions and other employment opportunities. In addition, faculty members benefit from the valuable opportunity to

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teach as they are exposed to the new ideas and opinions of trainees who think
with a different, nascent, often refreshing perspective. In turn, mentors can
then use these ideas to further direct research efforts. This interplay of ideas
and exchange of information is synergistic and spawns resident-, fellow-, and
medical student-driven research in plastic surgery.

What to Publish?
Plastic and reconstructive surgeons come in all forms, shapes, and sizes. As
such, each member of the field can make a unique contribution when the time
is right. The manner of contribution varies. In general, published studies form
the hierarchy of evidence in current evidence-based medicine (and surgery)
paradigms.
Meta-analyses have the unique advantage of synthesizing results from
many studies. A meta-analysis is a comprehensive survey of a topic in which
all of the primary studies with the highest level of evidence have been systematically identified, appraised, and summarized according to an explicit and
reproducible methodology. During the process of collecting primary data,
the authors include studies that are generally statistically similar enough so
that the results can be combined and analyzed as if they were one study. A
good systematic review or meta-analysis will often be a better guide to practice
than an individual article. There are certainly numerous strengths to the metaanalysis, but there are several weaknesses as well. First, it is rare that the results
of several primary data sets precisely coincide; instead, they usually overlap or
merely identify a trend. This is often due to the fact that the number of patients
in a single study may not be large enough to come up with a decisive, highpowered conclusion. Second, since the authors are charged with the responsibility of reviewing all primary data available related to the current topic, it is
possible to include studies that support a particular preferred conclusion and
omit studies that do not. To address the potential for this problem, the authors
should explain exactly how the chosen studies were evaluated for inclusion. As
readers, we should then ask ourselves, “Do these reasons make sense?” Third,
meta-analysis is peculiar in that it may amplify publication bias. Biases appear
because studies with documented positive or statistically significant findings
are published more often than those that have a negative or an insignificant
result. If the authors include only published studies, several weakly positive
studies may now result in a strongly positive review. To address this potential
confounder, it is important to consider whether negative studies exist.

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After the meta-analysis, randomized controlled trials (RCTs) provide the
next greatest level of evidence in the evidence-based medicine (or surgery)
paradigm. This type of work typically exhibits random (ideally a doubleblind) assignment, an intervention, and a control group. The study covers a specific period of time and measures a specific outcome or outcomes.
Briefly, a randomized controlled study is one in which there are two groups.
One group receives an experimental treatment under investigation. The control group receives either no treatment or some standard default treatment,
such as a placebo. In randomized controlled studies, patients are randomly
assigned to either group. Random assignment reduces the risk of bias and
increases the probability that differences between or among the groups can
be attributed to the treatment, and not to the selection, of subjects in each
group. The control group allows comparison of the experimental intervention with alternatives, including standard choices. For these reasons, RCTs
are commonly accepted as the standard and highest-level method of answering questions regarding the effectiveness of a particular therapy.13 For example, the statement that a particular medication can reduce microvascular flap
complications to 1 percent is not very informative unless we also know how
many patients have complications either without further treatment or with a
different treatment. Certain research questions cannot be answered by randomized controlled studies for ethical reasons. For example, it would be
unethical to study the prospective effects of smoking on microvascular flap
success by asking one group to smoke two packs per day and another group
to abstain, since the smoking group would be subject to unnecessary harm.
Finally, RCTs have the advantage of being prospective studies, further minimizing bias. However, they can also be very expensive and time-consuming to
administer.
A cohort study compares one group of patients with a particular condition
to another group not affected by that condition. Both groups are followed
and compared over time. Sometimes the initial group receives a treatment that
the second group does not receive. We discussed the ethical issues associated
with a randomized controlled study to document the effects of smoking on
microvascular flap complications. A reasonable alternative would be a cohort
study in which a group of people who already smoke is compared to a group
of non-smokers. This type of study can be performed prospectively to see
what, if any, microvascular flap complications may develop. Cohort studies, in
general, are relatively high-level evidence studies, but are also associated with
several weaknesses. First, they are not as reliable as randomized controlled
studies, since the experimental group may differ from the control group in

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an unknown way. Furthermore, like randomized controlled studies, they can
be expensive and time-consuming. Both cohort studies and RCTs are also
subject to changes over the course of the study. For example, subjects may
expire, move away, or develop other conditions. New and promising treatments sometimes arise and can be adopted by some of the patients. This and
other factors can prove confounding to an investigation.
Case control studies are similar to cohort studies. Both types of studies
identify patients based on current information, but case control studies have
the disadvantage of being retrospective, unlike cohort studies. In a case control
study, subjects who already have a certain condition (e.g., microvascular flap
failure) are compared with patients who have not developed this condition
(e.g., their microvascular flaps survived). For example, patients who exhibit
microvascular flap failure may be asked how much they may have smoked in the
past. Their answers would be compared with those of a sample of patients with
successful microvascular flaps using the same procedure by the same surgeon
around the same point in time. Case control studies are less reliable than either
RCTs or cohort studies, as they are retrospective and do not demonstrate
causation. The main advantage of case control studies is how rapidly they can
be done because the data are gathered simply by asking patients about their
past history. As such, it is possible for researchers to quickly discover effects
that would otherwise take many years to show themselves. For this reason, case
control studies are often the first study to suggest a new hypothesis, which can
then be corroborated (or refuted) with results from an RCT or a cohort study.
Finally, case series and case reports are the lowest-level evidence articles
found in the literature. These types of studies report on the treatment of
individual patients. These reports should be written with caution and under
rare circumstances because the low-level evidence limits their value. They can
be beneficial if a patient has a rare condition and the physician is uncertain
regarding what treatment to pursue. In such a situation, a case series or case
reports can help guide the physician. However, evidence derived from other
studies based on designs described previously would be considered better and
should be used whenever possible. Case series and case reports use no control
group with which to compare outcomes and hence have no statistical validity.
Useful background information is contained in other types of articles
such as editorials, commentaries, descriptions of ideas, and opinion pieces.
The authors of articles of this type are frequently experts in the field. Those
experts are often invited to write about a particular topic by journal editors.
Often a journal sends out a manuscript for peer review to an expert within the
field, who is then invited to provide a commentary regarding the work. This

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commentary can identify the strengths and deficiencies of the article under
review, but it can also provide a stage for the reviewer/invited author to discuss
his or her own work, either previously published or preliminary. This side-byside, compare-and-contrast format is useful for some readers. Also included
in the background body of literature are studies of varying importance that
document in vivo findings in animal models. With regard to clinical plastic
surgery, this is low-level evidence. However, many modern day plastic surgery
techniques, like distraction osteogenesis, are rooted in animal models. In the
future, it will be interesting to follow the impact on clinical plastic surgery of
animal studies investigating composite tissue allotransplantation, tissue irradiation, tissue regeneration, and genes. Finally, in vitro basic science studies
provide background information in some cases and have the potential to have
far-reaching implications for clinical plastic surgery. For example, molecular
mechanisms underlying some syndromic forms of craniosynostosis have been
elucidated in the literature, but due to immaturity in translational molecular
therapies in the clinical setting, these studies have had limited impact to date in
clinical plastic surgery. Nonetheless, these in vitro studies hold great potential
for the future.

Why Publish?
Perhaps most importantly, publishing in plastic surgery can drive the field forward. Many of the benefits from publishing in plastic surgery have already been
outlined above, but an appreciation for the far-reaching impact of publishing
is sometimes underestimated.
Perhaps as long as medicine has been practiced, its practitioners have been
guided by either personal or collective experience. Today, clinical medicine
is guided by literature and the experience it documents. This trend is now
referred to as evidence-based medicine (EBM),14 a term coined in the 1980s.
Almost undeniably, EBM is increasing in its pervasiveness and is integrally
taught in most medical school curricula. For example, according to some
sources, over 50 percent of general inpatient medicine practices are based on
RCTs. In contrast, less than 25 percent of surgical interventions are based
on high-level evidence.15,16 Clearly, EBM is not universal, especially among
surgeons.17 This trend is widely documented. Plastic surgeons should be aware
of this deficiency as they consider making potential contributions to the field.
EBM involves the integration of clinical expertise with the best available
clinical information to deliver optimal patient care.18 In most cases, this

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practice necessitates the use of high-level methodology, including metaanalyses, RCTs, and prospective cohort studies, to answer questions focused
on why rather than how plastic surgeons do what they do. Randomized controlled studies have several advantages which make them the gold standard for
the assessment of medical interventions. Specifically, randomization, blinding,
and prospective observation allow for elimination of potential biases that may
confound other study designs. For these reasons, RCTs can directly affect
patient care more than any other study design.19
However, in a recent study of the plastic surgery literature, only 3.3 percent
of all articles could be classified under high-level evidence.20 Of these articles,
only about half were of the highest-level evidence, namely, RCTs. This rate
is consistent with other surgical disciplines, such as otolaryngology, pediatric
surgery, and neurosurgery, which report between 0.3 and 3.7 percent of studies of highest-level evidence.21–23 This rate has remained unchanged for the
majority of the last two decades.20 In contrast, several reports suggest that
over 47–86 percent of studies may be of low-level evidence, including case
series and expert opinions.24,25
EBM is important for the field of plastic and reconstructive surgery to
move forward, as personal anecdotes, experience, traditions, and opinions are
not sufficient for guiding medical decisions. Yet high-level evidence reports
have been difficult to produce.26 EBM offers a paradigm by which optimal outcomes are obtained and inefficient practice is minimized, potentially reducing
clinical complications and administrative costs. Such an outcome would benefit a health care system that must survive on increasingly limited resources.
EBM offers an opportunity to increase efficiency, reduce complications, and
achieve best outcomes. Payers, along with society in general, can hope that
EBM will reduce the socioeconomic burden imposed by the diseases that we
see in our plastic surgical practices.

Conclusion
Publishing in plastic surgery is critical for the field to sustain itself. Plastic
surgery is already facing increasing competition for cases from other surgical
specialties, yet plastic surgeons may be the most innovative, resourceful problem solvers in any tertiary care center. Innovation in clinical plastic surgery
and research has distinguished plastic surgery historically and will continue
to do so in the future.27 It is through publishing in plastic surgery that this
identity will continue.

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References
1. Wolf SA. Paul Tessier, creator of a new surgical specialty, is recipient of Jacobson
Innovation Award. J Craniofac Surg 12: 98–99, 2001.
2. Rohrich RJ. The sandbox rules for plastic surgery. Plast Reconstr Surg 122:
303–305, 2008.
3. Argenta L, Morykwas M, Marks M et al. Vacuum-assisted closure: state of clinic
art. Plast Reconstr Surg 117: 127–142S, 2006.
4. Morykwas M, Simpson J, Punger K et al. Vacuum-assisted closure: state of basic
research and physiologic foundation. Plast Reconstr Surg 117: 121–126S, 2006.
5. Scherer S, Pietramaggiori G, Mathews J et al. The mechanism of action of the
vacuum-assisted closure device. Plast Reconstr Surg 122: 786–797, 2008.
6. Hidalgo DA. Fibula free flap: a new method of mandible reconstruction. Plast
Reconstr Surg 84: 71–79, 1989.
7. Rohrich RJ, Sullivan D. The role of the journal impact factor: choosing the optimal source of peer-reviewed plastic surgery information. Plast Reconstr Surg 117:
2495–2498, 2006.
8. Labanaris AP, Vassiliadu AP, Polykandriotis E et al. Impact factors and publication
times for plastic surgery journals. Plast Reconstr Surg 120: 2076–2081, 2007.
9. Caulfield RH, Maleki-Tabrizi A, Pleat JM et al. The factors considered by editors
of plastic surgery journals in evaluating submitted manuscripts. Aesthetic Plast
Surg 32: 353–358, 2008.
10. Dong P, Loh M, Mondry A. The “impact factor” revisited. Biomed Digit Libr 2:
7, 2005.
11. Jacso P. A deficiency in the algorithm for calculating the impact factor of scholarly
journals: the Journal Impact Factor. Cortex 37: 590–594, 2001.
12. Seglen PO. Why the impact factor of journals should not be used for evaluating
research. BMJ 314: 498–502, 1997.
13. Sibbald B, Roland M. Understanding controlled trials. Why are randomised controlled trials important? BMJ 316: 201, 1998.
14. Godlee F. Milestones on the long road to knowledge. BMJ 334 (Suppl 1): s2–3,
2007.
15. Howes N, Chagla L, Thorpe M et al. Surgical practice is evidence based. Br J Surg
84: 1220–1223, 1997.
16. Ellis J, Mulligan I, Rowe J et al. Inpatient general medicine is evidence based.
A-Team, Nuffield Department of Clinical Medicine. Lancet 346: 407–410, 1995.
17. Maier RV. What the surgeon of tomorrow needs to know about evidence-based
surgery. Arch Surg 141: 317–323, 2006.
18. Sackett DL, Rosenberg WM, Gray JA et al. Evidence based medicine: what it is
and what it isn’t. BMJ 312: 71–72, 1996.
19. Altman DG. Better reporting of randomised controlled trials: the CONSORT
statement. BMJ 313: 570–571, 1996.
20. Momeni A, Becker A, Antes G et al. Evidence-based plastic surgery: controlled
trials in three plastic surgical journals (1990–2005). Ann Plast Surg 61: 221–225,
2008.

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21. Gnanalingham KK, Tysome J, Martinez-Canca J et al. Quality of clinical studies
in neurosurgical journals: signs of improvement over three decades. J Neurosurg
103: 439–443, 2005.
22. Hardin WD Jr, Stylianos S, Lally KP. Evidence-based practice in pediatric surgery.
J Pediatr Surg 34: 908–912; discussion 912–913, 1999.
23. Yao F, Singer M, Rosenfeld RM. Randomized controlled trials in otolaryngology
journals. Otolaryngol Head Neck Surg 137: 539–544, 2007.
24. Chang EY, Pannucci CJ, Wilkins EG. Quality of clinical studies in aesthetic surgery
journals: a 10-year review. Aesthetic Surg J 29: 144–147; discussion 147–149,
2009.
25. Davis Sears E, Burns PB, Chung KC. The outcomes of outcome studies in plastic
surgery: a systematic review of 17 years of plastic surgery research. Plast Reconstr
Surg 120: 2059–2065, 2007.
26. McLeod RS, Wright JG, Solomon MJ et al. Randomized controlled trials in
surgery: issues and problems. Surgery 119: 483–486, 1996.
27. Longaker MT, Rohrich RJ. Innovation: a sustainable competitive advantage for
plastic and reconstructive surgery. Plast Reconstr Surg 115: 2135–2136, 2005.

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Technology, Toys, and Traps
Francisco Canales, MD

M

any years ago, every resident about to finish plastic surgery training
got the same sage advice for a successful private practice: be affable,
able, and available. In other words, do good work, be patient, be nice, and
your business will grow. As far as accouterments, all one really needed were
a pair of loupes and an anatomy book. Fast-forward to today’s 21st-century
world, and the advice has thus expanded: be affable, able, and available; but
also be sure to create a website, obtain a large credit line through your bank,
pretend you have an MBA so you can run a practice, act as if you have a degree
in marketing, and make like you are prescient about which technologies will
be around in five years. The terminology is now vastly different than it was
25 years ago. From lasers to Vasers, from computer imaging to computerized
records — most of us could not have imagined the vast change in landscape
that has been brought upon us in the last two decades.
To make matters worse, the increased competition for the cosmetic surgery
patient is evident as more physicians who are not plastic surgeons crowd the
field. There is intensified pressure to have an edge over the competition, and
it is no longer possible to sit idly by expecting that the waiting room will
gradually fill up because “I am a good doctor”.
Technology and instrumentation have played an increasing role in our
practices for the past 20 years, and they will continue to be even more necessary. Although technology is not the panacea that salespeople announce at
every meeting, it is here to stay. How to negotiate the hurdles of decisionmaking over the purchase and finance of new equipment is a subject that
rarely gets addressed during residency, and there are few resources for the
established practitioner to turn to. Here are a few words of advice, hard-won
by experience.

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Beware of the “Latest Technology”
For those who have heard the phrase “the latest advance” aimed at almost any
new device, it comes as no surprise that the latest technology is not necessarily
the best technology. Many techniques that have been around for decades still
work very well and require no more instrumentation today than they did 25
years ago. An older, well-respected colleague once told me that he was done
learning new techniques. As a matter of fact, he said, “I am trying to forget
some of the things I learned.” In the golden years of his career, he was clearly
successful, busy, and happy with his results. He saw no need to climb a new
learning curve so late in his surgical career.
For the newer practitioner, however, there is a combination of pressure
from patients who want the “latest” device seen on a plastic surgery television
show along with pressure from vendors who self-servingly peddle their wares
at trade shows, combined with still more pressure from one’s own desire to
remain ahead of the competition. Whether we like it or not, plastic surgery is
consumer-driven, and consumers are driven by what they see or hear in the
media. Technology does not a good surgeon make, but lack of technology in
one’s practice can be perceived as old-fashioned or, worse, out of touch with
the latest techniques.

Will It Be Here Five Years from Now?
It is difficult to know when a breakthrough in technology is here to stay. Every
month, practicing plastic surgeons are bombarded with advertisements for
emerging invasive and non-invasive technologies, not to mention the advertisements for newly improved surgical equipment. Companies take their case
straight to the consumer through carefully orchestrated marketing blitzes. All
one has to do is linger at the grocery line and scan the headlines of magazines
to learn what these supposed breakthroughs do. Stories abound of products
that are a new hit with celebrities, or products that have the magic label “as
seen on TV” or on some talk show. The fact is that, in less than a year, many
of those magical products will have been pulled from the market because of
unwanted or unforeseen consequences.
Some plastic surgeons cannot tolerate the potential uncertainty and unpredictability of these new technologies. After all, bad outcomes can lead to
unhappy patients, repeat surgery, and, of course, litigation. Even if there is
no threat of a lawsuit, the perceived lack of results can also lead to unhappy

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patients who will want their money back and who will go out of their way to
let friends know of their poor experience at your office.
To use stock market terminology, the “bears” among us prefer to use
techniques that are tried and true without venturing outside of our comfort
zone. After all, “If it ain’t broke, why fix it?” This approach is understandable,
particularly for the surgeon who may soon be contemplating retirement. There
is security in achieving good results with minimal financial outlay. An expensive
technological adventure requires time to pay for itself.
The “bulls”, on the other hand, are forever optimistic about new technology, since it may be the equivalent of having invested in Microsoft when
it first became available as a public offering. There is nothing more enticing
than having a tool that no other plastic surgeon in the community has. The
quandary, of course, is how to predict the longevity of a new technology and
whether to commit precious resources to such a technology. For the young,
or even the mid-career plastic surgeon, there are many reasons to venture
into buying new equipment and devices, tempting as it may be to sit on the
sidelines.

Predicting the Future
Since I went into practice in 1990, medical innovation has brought plastic
surgeons products and techniques that are undoubtedly worthwhile. Among
those worthwhile additions, I would count computer imaging and photo
archiving, endoscopic surgical techniques, laser technologies, and advanced
forms of liposuction. Some advances, like electronic medical records, are sometimes too expensive to implement for an individual surgeon, but they make
sense for large multi-specialty clinics.
On the other hand, there are so many devices that either disappeared
from the market or underwent enough changes so as to be unrecognizable
that caution needs to be the foremost word of advice. Plastic surgery offices
are littered with stories of poor investments in technologies that no longer
exist or of machines that cost more to run than they bring in revenue to the
practice. Just take a look at the expansive secondhand market for expensive
plastic surgery machines.
So, how do we avoid being one of those practices that never should
have bought an expensive white elephant that sits idle most of the time?
All of us practicing plastic surgeons have a limited budget to run our practices. Employee salaries, marketing expense, rent, purchase of supplies, and

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insurance are costs that never go away and continue to rise each year. Deciding
how much to budget for new technologies is a complex matter that cannot be
answered in a short paragraph, but there are guidelines that can be followed
to avoid being taken advantage of.

Should I Be One of the First to Buy to Get
an Edge on My Colleagues?
In general, I prefer not to be the first one on the block with the latest machine.
Invariably, the earliest users find that there are quick upgrades to the technology as long-term results, feedback, and complications start to come in. A
faster, sleeker version is inevitably in the pipeline as you are buying the original,
soon-to-be-outdated machine. A salesperson will glibly describe the wonders
of a machine they are about to sell you without ever mentioning that in three
months the company will come out with a better product. They will also gloss
over complications that are reported by early users, while emphasizing the
benefits and financial return to the practice. As soon as the updated version is
introduced, that same company representative will sing a new song, praising
the new version while listing a litany of limitations of the old version. It is easy
to feel like Sisyphus.
Quarterly sales goals demand that a salesperson meet certain thresholds
despite their inside knowledge of what may be coming soon. We once bought
a multi-platform laser where one of the heads was outdated before we actually
got to use it. The company demanded an additional US$20,000 for the new
head, despite the fact that the original head had not been used and was clearly
in line for replacement when we signed the papers.
One other recent example of early obsolescence is a laser device that had
three major upgrades in one year. Although the company was willing to credit
the initial purchase price (about US$75,000), each upgrade (which added
speed and power) cost an additional US$20,000 to US$30,000. The actual
cost of a device can sometimes double after the new upgrades are out, thus
making it impossible to calculate the cost-benefit ratio of a brand-new technology. It pays to have in writing a guarantee of free upgrades and service for
at least 12 months after your purchase.
As a rule, I also prefer not to be the last one on the block. When every
patient starts asking for a particular technology by name, it becomes harder
to continue to say, “I get good results out of my 1927 Ford relic.” Patients
expect any cutting-edge practice to keep up with the latest advances. It then

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behooves us as plastic surgeons to decide if a particular technology is worth
the price and whether the technology delivers the proposed results. It used
to take years to get patient feedback, but in the age of the Internet, patients’
responses and reactions come at the click of a mouse. There are many patient
blogs and websites set up specifically to give feedback on treatments they have
had. If you visit one of these online networking sites, you can get a general
idea of how happy patients are with their results, how willing they would be to
undergo the treatments again, and just how much money they are willing to
spend on a particular treatment. This constitutes an unscientific approach, but
it is still worth considering because, in the end, patient satisfaction will drive
or kill your business. If a particular technology gets consistently low marks
from customers, stay away from it despite what vendors and brochures may
tell you.

What is the Clinical Research that Supports
the New Technology?
Although white papers abound about all the devices that are out in the market,
I would caution you to pay most attention to white papers that appear in peerreviewed journals. Interested companies will contract with a plastic surgeon to
be an early user and then that plastic surgeon compiles his or her experience
into a white paper for the company. I take these company-provided papers
with a large grain of salt. It is too easy to be elated by being the first in your
community to use a device and to have a three-month patient waiting list. It
is human nature to want to spin the most positive view, and papers written
specifically for a company tend to be less rigorous than peer-reviewed papers.
Surely one of the worst ways to decide whether to buy a new device, program, or system is the fact that we saw it at the annual meeting that we all
attend. Shiny brochures, friendly salespeople, an evening extravaganza sponsored by the company, peer pressure, and “a great financial deal that expires
at the end of the show” are some of the reasons many of us arrive back in our
offices with signed documents for very expensive machinery and the promise
of more patients. Gluttony in the halls of a crowded exhibit hall invariably
leads to indigestion in the not-so-crowded waiting room of one’s practice. It
is best to leave emotion behind even when it means that we will not get “the
deal” available at a society meeting. Contact colleagues who already own the
machine, and ask hard questions. Would they buy this machine again? What
is the worst complication that they have had? How often do patients demand

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their money back? It is easy to be misled by salespeople, but it is harder for a
trusted colleague to sell you down the river with a device they are not happy
with.
Another surefire way to be misled is to listen to the written testimonials
sent into your office by “experts” in the field who are willing to teach you not
only the technology, but also how to get your practice to boom as a result.
Invariably, many of these experts are mercenaries who will pitch one machine
today and the next highest bidder’s machine tomorrow. I have received personal letters from one such expert who, in one year, associated himself with
three different companies with similar technologies. Each letter made the
newest company sound like the “real deal”, backed by his expertise in the
area. It is disturbing to see more plastic surgeons become pawns of the companies. Companies will offer titles such as “medical director” or “consultant”,
offer a retainer or a salary, and shazam! The doctor has never seen better
results in his or her career. Some doctors now make more money from the
courses they teach during the year than from their practice of plastic surgery.

Customer Service After You Buy is of Utmost
Importance
For any new technology you purchase, you will have a customer service representative. Before you buy, it is imperative that you poll several colleagues who
own that particular machine about what happens when the machine breaks
down (they usually do at some point during the lease). Ask how quickly the
sales representative returns calls when a repair is needed. We know that representatives return calls very quickly when they are trying to make a sale,
but their true measure is how well they respond when you are having problems. How does a 200-pound laser get returned to the company for service?
Who pays for the shipping or the FedEx charge? How quickly does the laser
get returned, and do you get a free replacement in the meantime? These are
extremely important questions to ask because when you have a broken-down
laser in the middle of a fully scheduled day of treatments, the fallout is tremendous. Patients will understand, but they will not be happy, since they may have
scheduled a day off work. They will lose some or all of their confidence in the
treatment. Not only does the day end up without revenue, but worse, if the
machine breaks down in the middle of a treatment, you will end up returning money. Unreliability of a machine and poor company support can cost
you dearly.

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Beware of the Cheaper Version
New technologies invariably spur competition among rival firms. No firm
wants to miss out on a particularly lucrative slice of the pie. One promising
technology will inspire an immediate sprouting of competing technologies
that claim to deliver the same results, although at wildly varying prices. The
temptation is to choose the cheapest machine, since they are all supposed to
produce the same results. But beware!
Several years ago, a new laser hair reduction machine was marketed at a
fraction of the cost of the mainstream laser hair reduction machines. We did
our due diligence and called the individual responsible for the white papers
that the company sent us. He, of course, told us that the machine of interest
was one of several he used in his practice (he probably received a commission
from each company). He encouraged us to go ahead with the purchase. Since
he was a respected name in the laser hair reduction community, we quickly
purchased the machine.
The painful lesson learned is that when something seems too good to be
true, it probably is. The machine cost us 20 percent of the cost of a comparable
laser hair reduction machine at the time. We were ecstatic at our business
acumen, and we were able to pay in cash for an even better deal. Unfortunately,
the machine we bought was slower, more cumbersome for the operator, more
painful for the patients, and much less reliable than anything on the market
at the time. Several patients were burned and demanded their money back.
Not a single patient had a good result for the intended laser hair reduction.
We ended up literally throwing the “bargain” laser hair reduction machine in
the trash after returning thousands of dollars to unhappy customers who saw
no results.

“All You Need is Three New Patients per
Month to Cover the Payment”
One measure of how long it will take to make your investment back is the
relation between the cost of your lease and the number of treatments it takes to
cover that lease. When an eager salesperson tells you that “all you need is three
new patients per month” to cover your lease payment, they are omitting a lot
more than they are telling you. Let’s consider a lease payment for, say, Magic
Laser Extraordinaire (MLE). After the salesperson has knocked 10 percent off
the price, thrown in some disposables, and let you defer your payments for

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three months, your new laser arrives at your office with a five-year lease that
“only” costs US$4,000 per month.
In order to keep the pitch simple, the salesperson has told you that if
you charge US$1,000 per patient, you only need to have four patients per
month to cover your lease payment. Never mind that you will end up paying over US$125,000 to lease or buy this new laser. The four patients per
month will merely cover the cost of your lease, but the company representative conveniently ignores other costs associated with MLE. Who will
operate the laser? How much does technical support cost? How will people
know about your new machine without some marketing? Are there hidden
costs?
The person who will operate the machine may not be the physician. Many
of the technologies available, such as laser hair reduction, intense pulsed
light treatments, and fractional resurfacing are run by physician extenders.
Depending on your state of residence, this means that your new machine will
be run by either a nurse, an aesthetician, a medical assistant, or a physician
assistant. The salary and benefits that the physician extender commands can
be significant, especially in a state where only nurses or physician assistants
are allowed to run the machines. So, if you are paying US$40 to US$50 per
hour for the person to run the machine, remember to account for that in
your costs. If that person is doing 10 hours of work per week in your practice,
remember to allocate another US$400 to US$500 to your actual weekly costs
(US$1,600–US$2,000 per month added to your lease cost).
Some nurses work as independent contractors rather than as salaried
employees. These nurses usually take a share of the profits. Make sure you
are paying the nurse a share of the profit rather than a share of the gross
receipts; otherwise, the nurse will make a nice profit and you will be lucky
to break even. Sometimes, the nurse will go in with the doctor on the purchase of the equipment. If you contemplate such an arrangement, make sure
you have a contract lawyer review the terms of employment as well as exactly
who pays for the lease. Recently, I spoke to a nurse who had been sharing
lease payments with a doctor. When the business went south because of the
economy, the nurse quickly exited and left the doctor holding the entire lease
payment for the remainder of the five-year contract. Her name had not been
on the original lease and they had no more than a gentleman’s agreement
to obligate her to pick up half of the lease payments. With a departed nurse
and no business, the doctor was left to figure out how to continue to make
payments. Meanwhile, the nurse looked elsewhere for employment without
any financial burdens.

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An extended warranty is an additional cost associated with a new laser.
Representatives for laser companies often minimize or neglect to mention continued service for their machines. While most lasers come with a 12-month
warranty, continuing a warranty beyond 12 months can cost an additional
US$1,000 per month! Remember to add that US$1,000 to your lease payment to calculate your total cost. If you elect to not continue the service
program, you risk paying to have the laser serviced at a time when you are
desperate. The rate for an uncovered service is extremely high, and you will
be in a position of weakness when you call. In addition, you will be forced to
rent a replacement laser at a high cost until yours is repaired.
Better than the best technical support is having a reliable machine. The
cost of having a machine that fails or malfunctions is high. We had experience
with a laser company that prided itself in customer service. Their machine had
continuous problems that the company blamed on our staff who had been
trained extensively by the company. The machine broke down repeatedly,
requiring extensive rescheduling of patients, idle nurses, and angry customers
who demanded some compensation for the time that they wasted by showing up for their scheduled appointments. Customer service meant that we
would ship our machine out for repair, wait for the company to ship us a
replacement, and have our staff reschedule entire days of treatments. Despite
repeated assurances by the company that the latest repair would be the last
one, we proceeded to have to send back our US$150,000 laser to the company more than five times in a short period of time. The disturbance that the
mechanical failures caused in our practice paled in comparison to our loss of
faith in the laser and our patients’ loss of faith in our practice. I would urge
anyone who is willing to spend US$150,000 on a machine to spend a full
hour on the telephone speaking with present owners of the machine to ensure
that they are happy with its performance. More importantly, ask them if they
would buy the machine again, knowing what they have learned since they
bought it.
Once you have purchased or leased your special, new machine, how will
you attract people to come in and have treatments? No one will know you
have the “latest weapon” unless you get the word out. While many of us with
established practices can utilize internal marketing techniques, sometimes it
requires a combination of both external and internal marketing to make sure
you can bring in the very patients you are targeting. No one can tell you how
much to spend, but marketing campaigns for new technologies can sometimes
be very expensive, and they may require you to use radio and newspaper
advertising or offer seminars in addition to any internal marketing you plan.

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Hidden costs are the most deceptive. No one ever tells you that your
accounting bill is also about to go up, but it will. In addition to discussing
new equipment purchases with your accountant (not a bad idea), adding the
equipment lease payment to your bills, adding a physician extender to the
payroll, and figuring in the bookkeeping for your additional marketing costs,
your accountant will want to be compensated. Other hidden costs include
new supplies such as towels, distilled water, ultrasound gel, and drapes. New
towels and sheets can mean additional laundry costs. All those hidden costs
must be accounted for if you are to become profitable.
Another hidden cost is appeasing patient dissatisfaction. Bringing the latest
technology to your community can raise expectations, sometimes to unreasonable levels. Beware of raising patient expectations too high, for you will
soon be returning money to unhappy patients who believed that a non-invasive
procedure would make them look as if they had just had a facelift. In the long
run, it may be better to return a dissatisfied patient’s money then to let them
stew in anger.
If a new technology is truly successful, traffic through your office should
really ramp up. Increased traffic will mean more new appointments, more
phone calls, and more follow-up visits. Simply stated, your present staff will
have more to do. At some point, you will need to consider hiring additional
staff.
As your practice grows, and as you invest in an additional one or two laser
machines, you might possibly need additional space. Crowding existing rooms
can counter any calming effect that your practice or medical spa is trying to
portray. You may find that adding space or dedicating a new area to the new
equipment is the only way to allow treatments and follow-ups to proceed
within a pleasant setting.
You may also need new software programs for scheduling, photograph
archiving, and management. The extended warranty Catch-22 also applies to
this new software. You will find that every year there is a “modest” charge
for continued software support of each of your new programs. These costs
can run upwards of US$5,000 per year if you run several high-end programs
that are a must in sophisticated cosmetic practices. The compatibility of any
new software program with your existing programs you already own is also
extremely important. There is nothing more inefficient than having to enter
the same data (patient name, address, etc.) into three different programs that
do not talk to each other. It is worthwhile paying more for programs that have
multiple functions and data-sharing capabilities.

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How Do I Pay for an Expensive Machine?
Always keep your accountant in the loop. Tax laws, such as Section 179,
change frequently. What applied in your previous discussions may no longer
hold true. Your accountant will be aware of potential tax implications (both
good and bad) of any large purchase you are contemplating. He or she
will also be able to help you make a decision on how best to pay for the
equipment.
Is it better to buy or lease? This question will, and should, come up with
every acquisition you make during your practice. The answer may be different
during different portions of your career, but make sure that your accountant
sees the terms of the loan or lease before you commit to something that
may take you five years to pay off. An experienced accountant will also help
you determine the true cost of incorporating the new technology into your
practice. The information will determine how many new patients you actually
need after factoring in marketing costs, staff time, maintenance contracts, and
all the other costs mentioned above.
It is also helpful to have a close relationship with a bank. Most banks are
eager for your business, and they will usually assign you a personal banker if
you place the deposits from your practice into that bank. Many cities have
smaller, community-based banks with outstanding reputations. I have found
that community-based banks usually deliver more personalized service than
the national brands. As a rule, you should always have a credit line open for
times when cash flow is tight. You should spend some time getting to know
your personal banker at a time when you do not really need their service.
Getting to know them then will make it easier to make a call at a time of need.
That personal banker should get to know you and your business so well that,
when you find your ideal new machine, all you need is to tell your banker the
price along with the terms you want, and the papers should be delivered to
your office for signature.
Balancing the financial and medical risks of a new technology will continue
to require common sense and investigative skills. A dose of skepticism toward
any device that promises to revolutionize the field can also protect you from
making a foolish investment. Our field has always been one where creativity
is rewarded. There is a saying that “he who dies with the most toys wins”.
In plastic surgery, you only win when the toys pay for themselves before they
become obsolete. We cannot turn the clock back to the days when all we
needed to succeed was diligence, a pair of loupes, and knowledge of anatomy.

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Plastic surgery and technology are forever tied at the waist. We can only expect
the field to become more crowded and the expectations to be higher as the
media selectively play up the benefits of the newest devices. If you plan well and
arm yourself with unbiased information, you should sail through the plastic
surgeons’ Toys “R” Us with flying colors.

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A Medspa: To Have or Not to Have
M. Dean Vistnes, MD, FACS and Lynn Heublein, MBA

O

wning and running a medical spa is enticing. The media constantly
trumpet the latest advances in medical spa services through television,
magazines, websites, and blogs. All that media coverage is contributing to
an explosion in the age management industry in the U.S. In 2007 alone,
consumers spent US$13 billion trying to stave off the ravages of time, and
non-surgical options to reverse or slow the aging process are growing every
year as companies strive to capitalize on people’s craving to look their best
without having to go under the knife.
Opening your own medical spa seems clear … or does it? Is it really something you should consider as a plastic surgeon? While the growth of the age
management industry is impressive, anyone considering opening a medical
spa should consider the time and costs required before embarking on such a
venture. An analysis of the overhead of a practice with a medical spa should
be compared with the overhead of a practice without a medical spa. Let’s
first consider a purely surgical solo cosmetic practice in a geographic area that
has a hospital or a surgery center with affordable cosmetic rates. This type
of practice can be run very profitably with a reasonably low overhead. The
office space can be relatively small, and the staff size can be limited to just
one to three employees. The principal recurring expenses are rent, payroll,
and insurance. Capital equipment expenses, inventory, and supply costs are
minimal. A purely surgical cosmetic practice usually has fewer overall patients
on a weekly basis, but the margin on each procedure will be relatively high.
It does not take many surgical procedures to cover your overhead and show
a significant profit.
Of course, the downside to having a purely surgical cosmetic practice is
that you fail to capitalize on the demand for all the non-surgical cosmetic
treatments. The cosmetic surgical patients in your practice will naturally be
a population that is pre-selected to have a high interest in ancillary services
and medical grade products. The public loves to hear about non-surgical ways
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to look younger or fresher, so they are well publicized by the media. If you
as a plastic surgeon do not offer at least some of these treatments, patients
will go elsewhere. You will lose not only those patients and their money,
but also their potential referrals. Consequently, most cosmetic plastic surgeons decide to offer at least a nominal choice of non-surgical or medical spa
services.
If you think you do not need to make a profit on your medical spa because
you anticipate that your profit will come from converting medical spa clients
into surgical patients, think again. There will be some referrals to your surgical
practice, but nothing like you might expect. Embark on creating a medical spa
only if you intend for it to be a profitable business in its own right. Entering
into a potentially risky venture separate from your surgical practice is a big
decision. Find someone to talk to who can give you good, sound advice. This
person generally will not be a medical spa franchise representative or a spa
consultant. Spa consultants are in the business of selling their services to you.
Avoid them. Instead, find someone you would like to emulate who runs a
successful medical spa. If you plan well and seek advice from reliable sources,
you will be more likely to position yourself for success. A well-run, wellmanaged medical spa can generate significant revenue and can even increase
your surgical patient flow.
Once you decide to not only start a medical spa, but to make it profitable, you will need to figure out what service(s) you are going to offer. What
are the most popular non-surgical offerings that are driving the medical spa
industry? Botox, fillers, laser and light-based treatments, radiofrequency skin
tightening procedures, skin and body contouring procedures like VelaShape
and Endermologie, microdermabrasion, chemical peels, laser vein treatments,
sclerotherapy, facials, massages, and a countless array of skin care products
just scratch the surface of what is available and what is yet to come. The high
demand for these treatments is fueling research and development in biomedical device and cosmeceutical companies. Consequently, new and more effective procedures and products are introduced every year. So what should you
offer and in what type of setting? The options range from a very narrow
assortment of services that meet select patient interests to a full gamut of
products, treatments, and services. The setting can range from a single, parttime treatment room in an existing facility to a free-standing multi-million
dollar complex.
What facility size should you look for, what services shall you provide,
and what data do you use to decide all these things? As with the undertaking of any endeavor, opening a medical spa, large or small, entails potential

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risks as well as potential rewards. It is seductive to imagine a buzzing medical
spa affiliated with your surgical practice, but not all medical spas are productivity centers whirring with activity. The costs can be high, and the profits
are not always forthcoming. Consider risk vs. reward. Some of the benefits of opening a medical spa include a greater number of potential patients
to support a cosmetic surgery practice, cross-referrals for services between
surgical and non-surgical practices, additional income, and retaining your
patients’ interest and loyalty so that they do not flee to your competitors.
Other less tangible benefits include increased public visibility that can occur
over time with a successful medical spa. This in itself can lead to other business
and financial opportunities. But, as we know from the practice of medicine,
along with the potential benefits come the possible risks. It is important to
know those risks, and then minimize them if your medical spa is to be a
success.
The two greatest risks in starting a medical spa are financial and medicallegal. The risks of a small operation will be low and easily manageable. With
fewer variables to control, direct supervision should be easy. As the medical spa
grows in size, you will have to delegate some responsibilities. Direct supervision of your staff at all times becomes increasingly difficult as the patient load
grows. This increases the risk of complications. By maintaining a high level
of involvement with the professional staff, you should be able to minimize
the occurrence of complications and problems. If you allow a small medical
spa practice to grow without adequate oversight and management, you invite
disaster.
There are a number of basic protocols that must be implemented to minimize the risk of medical complications in business of any size:
1. All providers must be adequately trained with proper documentation of
their training. Ideally, they should pass a standardized written test that
demonstrates their knowledge of the procedures they are performing.
2. A detailed policy and procedure manual should cover all the procedures
that are typically performed with strict guidelines.
3. Routine meetings should be held with all staff to review quality assurance
issues.
4. Direct physician oversight is a must. Critical chart review is essential as part
of this oversight.
In addition to the medical-legal risks, the financial risks of starting a medical
spa can be significant as well. Unfortunately, as most of us know, physicians
have little or no training in business, nor do they have any experience in

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the actual running of a business. Opening a private practice is a trial-by-fire
learning process for most plastic surgeons. If we try something and it works,
great; if it does not, we will try something different. Sometimes we find out
what our competition is doing; other times we get advice from older, more
established colleagues who have learned the ropes through their own mistakes.
This rather unsophisticated approach is how many plastic surgeons launch
their private practice. They only hope their little start-up practice can become
a million dollar business if they do not make too many mistakes.
Naturally, trial-and-error is not the smartest approach to starting and running a million (or a multi-million) dollar business. It can work for a small,
uncomplicated practice, but it is not the way that the best business schools
teach their students to start and run a company. As the business grows, there
will be more variables to consider and more elements to manage. To navigate your way, you will need a map. We call this type of map a “business plan”.
Your business plan can be simple if you are starting small, or more detailed if
you are starting with a million dollar facility. There are numerous books and
resources available that discuss business plan development, employee hiring,
management, training, customer service, and day-to-day operations. Included
in any business plan should be a formal set of business goals, data supporting why those goals should be attainable, and a detailed plan for reaching
those goals. Also included should be a marketing strategy, conservative financial goals, and standards for quality of service. The business plan should also
reflect the legal and malpractice issues in your state, so you will need to familiarize yourself with those. Confirm that your malpractice insurance covers all
the professionals under your umbrella as well as the procedures they will be
performing. Also make sure that your general liability insurance policy extends
to cover what and where you plan to operate. Finally, check with the city to
see if your facility location is zoned for what you plan to be doing. As part of
your business plan, anticipate adding capacity as you grow, whether in your
current location or in an adjacent new location.
Add up all your expenses. You will need to calculate how much money
you need to bring in every month just to break even. Securing more funding
later can be difficult, so anticipating costs as you write up your business plan
is essential for survival. Be sure to include the expenses for rent, insurance
(malpractice, general liability, and workers’ compensation), property and other
business taxes, payroll, supplies, disposables, utilities, cleaning and laundry
services, marketing costs, and equipment lease payments. You will likely find
yourself in the red for 12 months or longer, and you may have to finance that

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debt with added capital. In fact, you should plan for it. An undercapitalized,
fledgling business can fail unless additional funding is secured as the need
arises. Consider taking out a small business loan or a line of credit. Close
tracking of all expenses, inventory, and revenue is important. If you are too
busy to do it yourself, hire someone competent who can do it for you. Large
medical spas will naturally require a larger inventory of retail products as well
as medical products, such as Botox and injectables. The cost of this inventory
can be enormous if it is not controlled properly.
Part of running a successful medical spa is figuring out what services to
offer to attract clients. Determining your services menu is an essential element
of your business plan. What do potential patients really want? Look around
and do your homework. Visit various medical spas, large and small, in different
geographic areas. What are the best services and products they offer? What
does not work, and what can be improved upon? Check out your competitors’
marketing materials and websites. Note what products and services they offer
and how the information is presented. Have treatments done yourself. Also
consider sending in friends, spouses, or key employees with a list of questions
that they can have answered for you. Start out with a basic, manageable service
menu. Expand only as the demand grows, along with your knowledge of and
comfort with new products and procedures. As you do your research, you will
likely see a variety of services, including facials and massages alongside intense
pulsed light (IPL) and Botox. Remember that traditional day spa services
make very little profit; the average margin for day spas in the U.S. is only 5–10
percent. The medical services offered in medical spas are far more profitable.
With the overhead you will pay on equipment leases, well-trained staff, and
expensive products, you can actually lose money by offering such services as
waxing. So, choose your menu carefully.
Once you have determined your menu, you will need to set your prices.
Do a competitive pricing analysis of competitors in the area. Your own prices
should be neither too cheap nor too expensive. If your prices are too low, you
will develop a reputation for being the low-price leader. Patients attracted to
the lowest prices will not be your long-term clients. On the other hand, if
your prices are too high, you can price yourself out of the market. Mid-range
prices give you the flexibility to offer discounts or specials if needed or to raise
your prices as you get busier. Your goal should be to attract clients who will
be your lifelong patients and who will refer their friends.
If you decide to go ahead and open a medical spa, how do you decide
what to offer and how to go about making it work? Whether starting with a

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small operation in your existing facility or a brand new full-scale operation,
the essential elements to guarantee success include the following:
1. Make it a great experience for the patient. Unparalleled customer service
is essential. From the first telephone call before the visit to the minute they
walk in until they leave and including all the follow-up communication
after the visit, patients should be treated the way you would want to be
treated.
2. Location, location, location. You hear it all the time. Good building signage
is free advertising 365 days a year. You are running a classy operation, so do
not put it in a strip mall, a rundown area, or an obscure hidden location.
3. Offer the right combination of procedures and products. Do not offer a
procedure unless the results will make patients want to come back again
and again. After all, that is ultimately what all patients want — predictable
positive results.
4. Make sure you have the right equipment for the job. Selecting and buying
the right equipment can be very difficult with all the procedure and vendor
choices available.
5. Hire the right staff, from administrative personnel to providers to managers. They can make or break you.

The Experience
Create an environment that is clean, updated, relaxing, and professional. You
are not creating a day spa; you are creating a medical spa. The ambiance
should be inviting and relaxing, yet patients should still sense the medical
professionalism that will instill confidence. Even if you start out with just one
room, avoid making it look and feel like a doctor’s office exam room. First
impressions make a huge difference, so make it special. Details like comfortable, relaxing exam chairs in a professionally decorated office will work in your
favor as your client considers whether to stick with your medical spa or search
elsewhere to have his or her treatments.
If possible, consider a separate waiting area as well as a separate entrance
and exit for your medical spa patients. Medical spa patients should not be
sitting with post-surgical patients who may be in pain, nauseated, or just scary
to look at. If possible, divide your existing waiting room into two separate areas
with curtains or partitions. Be creative. Ask an interior designer for assistance
with space layout and patient flow. If you have the space, create a relaxing
and inviting area to display retail products and other educational items to

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promote what you do. Digital photo frames with before-and-after pictures
and LCD screens with promotional movies can help educate patients about
the possibilities within the array of services and products you offer.
Customer service is critical. Greeting patients when they walk in the front
door, using the names of established clients, and making them feel at home
makes a huge difference to building a sustaining relationship. People will pay
a few more dollars for a service if they feel like they belong to your family.
There is no place for attitude in a service-oriented business like this. Excellent
telephone skills are important when calling patients or giving information. Do
not leave patients on hold, and answer telephone calls promptly. Treat your
patients like stars and celebrities. Make it all part of the experience. Those
little details will add up and make patients tell their friends what a great place
you have. In fact, treating customers well will be as important to your success
as having good products and effective services. If you hire good staff and
train them to be experts in customer service, your patients will develop a
relationship with your medical spa.

Menu
At some point, you will need a separate, professionally designed, and professionally printed brochure listing the services and products you offer. It does
not have to be elaborate or expensive, but it should be professionally done.
The brochure serves to tell prospective patients what you do and why you
are different than the competition. Along the same lines, you should consider
having a separate website for your medical spa that is linked to your surgical
website and vice versa. You should try to give the medical spa its own identity,
especially if it is in your existing facility.

Location
The importance of finding a good location cannot be understated for the longterm success of a medical spa. This is particularly true if you are considering a
stand-alone facility. How many people will even know that you exist if you are
inside a medical professional building on the third floor with no visible signage
from the street? What if you are in a strip mall set back from the street where
nobody can see your business? Your success will depend in part on having a
large database of active patients. Good visibility is free advertising, so you will
want your medical spa to be visible to the people that you want to attract as

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clients. In order to choose the best location, look at the types of businesses in
the area and the demographic of people they attract. Look for a location that
has a lot of drive-by traffic and pedestrian flow. And, of course, unless you are
in a major urban center like Manhattan, make sure that parking is easy. You
can have a great facility, but inconvenient parking will frustrate your patients,
and ultimately your patient scheduling will be a mess.
If you are designing a build-out for a new facility, make it look inviting
from the street. Do not create an intimidating, sterile, medical-looking facility
that people will be reluctant to walk into. Large, open spaces for strolling by
and windows that allow people to peek in from the street will attract curiosity.
Good signage in front of and on the building will build brand name recognition for the public. You want people to notice your building each time they
see it so that they consciously know where it is. It might be a year or more
before one of your patients mentions your medical spa to a friend, but if
they have a mental image of your facility, they will be more likely to call up
and make an appointment. Do not underestimate the long-term benefits and
power of brand name recognition in business success.

Employees and Staffing
Depending on the size of your operation, you will need administrative support
staff, nursing staff, massage therapists, aestheticians, and managers. You may
also need someone to do your books, accounting, and inventory.
In some cases, you get what you pay for when it comes to employees, but
this is not always true. When hiring a massage therapist or an aesthetician, make
sure you hire someone who has the ability to retain customers. Patients come
back to aestheticians and massage therapists because of the experience, the
results, and the relationship they build with that provider over time. Someone
with a great personality ultimately will be unable to retain clients if they are not
able to deliver the results. Similarly, you can have great treatments and great
ambiance, but if the aesthetician or massage therapist is not able to connect
with the client, the client will not come back. Take the right time to find the
right person with a great personality who can deliver great results.
Many medical spa owners stumble over how to pay their service-oriented
staff. Be sure you pay by the hour, not by profit sharing or commission. The
old rule of paying a nurse, a massage therapist, or an aesthetician 50 percent
of the revenue generated is nothing more than absurd. By the time you factor

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in your overhead and cost of goods and services, you may generate zero profit
for the business and you can potentially lose money. Instead, set goals and
incentives for the staff to reach certain financial targets. Pay bonuses based
on production and revenue generated. In addition to hiring personnel with
great personalities, you will also want to select staff with a strong work ethic.
They should present themselves with a professional demeanor and appearance.
After all, they represent you and your medical spa. If you want to have and
retain the best staff, train them well and pay them accordingly. Nurses, nurse
practitioners, and aestheticians who are really busy in your medical spa will
be able to make more than they would be able to in their traditional work
environment, and the lifestyle and the job itself will be significantly better
than anything else they could do. They realize that there are no night and
evening shifts in general, and that there is no call. Working in a successful and
respected medical spa is a highly sought-after position, so be selective in who
works for you.
Review the requirements of the medical board of your state to see if you
need to have a nurse practitioner, registered nurse, or aesthetician for certain
job descriptions and equipment operation such as lasers. A nurse practitioner
will give you the most latitude and flexibility in treatments, but will cost you
more; in the long run, however, it may be a better value. Your medical spa will
ultimately succeed from the efforts of all your staff, including management,
administrative assistants, and providers. While you are still building up your
medical spa, hire employees part-time or at least use them for different functions. Make sure that expectations are clear upon hiring that every employee
will be expected to pitch in and help out in all aspects as needed. Full-time,
benefited employees who are not generating revenue will burn through your
capital very fast. Starting with part-time employees initially will be easier on
your budget, and you can increase their hours as their schedules fill up. If
they have holes in their schedules and are not seeing patients, find something
for them to do, especially if they are being paid on an hourly basis. Be leery
of nurses, massage therapists, or aestheticians who promise to bring all their
existing clientele. It rarely happens. If things seem too good to be true, they
probably are. Be careful of hiring well-known famous nurse injectors with
years of experience from working at other practices. These people will often
turn out to be prima donnas who do not work well with others. Find someone
who is smart, motivated, energetic, has the ability to get along with others, is
a team player, and has the basic skills but a great ability to learn. Teach them
well and treat them well, and they will stay with you.

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High staff turnover is a huge hindrance for success. To minimize turnover,
make the work environment a place people want to come to. Treat employees
with respect, make them feel valuable, and pay them appropriately so they
feel they are getting justly compensated. Manage people up or manage them
out. Do not be afraid to let someone go if they are not performing duties up
to your expectations or to the standard of the business. There are plenty of
people out there who will thrive in a great job. Find them. It is better in the
long run to take the time to find a great employee than to hire someone in a
hurry who is only average.

Procedures
What exactly are medical spa services and the products that go along with
them? What should you offer your patients? As a plastic surgeon, you have
a lot of choices. Depending on your state medical board laws, you can offer
a wide variety of medical procedures that be performed by either a physician or a nurse under direct physician supervision. You can also include more
traditional spa services such as facials, waxing, and massages, but be mindful
of the potential to lose money on such services unless you set your day spa
services apart from other spas and price them accordingly, create packaged
services that are sufficiently priced, or limit the duration of the less profitable
services without dropping the price. Skin care products can range from medical grade prescription products to “feel-good” spa products.
Let’s look at the top five non-surgical procedures from the 2007 American
Society for Aesthetic Plastic Surgery statistics:
1.
2.
3.
4.
5.

Botox.
Injectable fillers.
Laser hair removal.
Microdermabrasion.
IPL treatments.

These are probably the areas to focus on first based purely on the demand.
Botox and fillers require little or no capital equipment purchases, so they can
keep start-up costs low. Botox injections are far easier to learn and do than
fillers, which can be an art to learn and master. Start with one or two fillers
that are easy to learn and forgiving, like hyaluronic acid fillers. Everything
your staff does, they need to do well. When starting out, they cannot possibly
master everything at once. Start with procedures that are easy to master and
will guarantee success and happy patients.

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Equipment
If you are trying to decide on a laser hair removal machine or an IPL machine,
consider that twice as many patients have laser hair removal done annually
compared to IPL. The cost of capital equipment for these treatments can be
US$50,000–US$100,000 per machine. Consider starting out by offering laser
hair removal, then adding IPL later on when you can afford the added expense
and when your larger patient database will provide treatment opportunities.
Should you buy new or used equipment? If you buy a used machine, does it
come with a warranty? If you buy new equipment, should you buy an extended
warranty? What are the costs of consumables that need to be replaced? IPL
heads need to be replaced on occasion at a moderate expense. Most laser hair
removal machines, if properly maintained, last a long time with little required
maintenance, and they generally do not require replacement of heads or tips.
Their lower cost of consumables is a big plus. Machines like Thermage are
built on a “razor-razor blade” model. The cost of the machine is kept on the
low side, but the tip is good for only one patient and it costs hundreds of
dollars to purchase each tip. All of these things will affect your margin on the
procedure and your ultimate profitability.
When looking at equipment, you will see that some machines perform
several types of treatments. Unfortunately, such a machine usually does none
of them well. Sales representatives will frequently try to tell you that their
machine is able to do laser hair removal, IPL treatments, skin tightening, and
resurfacing all with one device. This is rarely the case. Buy the gold standard
technology for the procedure you are going to offer.
Carefully evaluate each company you are considering purchasing from.
How long have they been in the industry? Look at their product line over time.
Have they tried to modify one of their old technologies to meet a new need or
demand? Many companies will do this because it is a lot easier and cheaper for
them to repackage an existing technology than to develop something new and
better. Ask for details on equipment. Be careful if you are considering buying
used equipment. If you get a warranty, get it with the device manufacturer,
not with some third-party repair company that a used machine vendor has
a deal with. Consider buying a laser demo machine, if possible, as long as it
comes with a full warranty. You can save considerable money by doing this. Buy
from companies that have been around and in business for a long time, and
that have a proven track record and excellent customer service and support.
Make sure that training is included and that there is good customer support.
Ask to speak with physicians or nurses who use the different machines you are

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considering. Remember that in many cases a nurse is the best person to speak
with, as they may be doing most of the actual treatments. Would they select
it again? Do they have any experience with any other lasers or machines that
you are considering? Have they had any problems with the equipment? What
is the service and support from the company like? Many larger companies will
have a replacement or loaner machine delivered overnight to your facility if
you have a problem. If one of your machines goes down and you are without it
for weeks, this can be a huge problem for patient scheduling and your revenue
flow can take a big hit.
If you decide to buy a new machine, do not buy it at a meeting. Do your
homework first. Sales representatives will almost always extend the same deals
and prices to you that they offer at meetings, and sometimes you can even get
a better deal. If they will not consider some sort of deal, consider taking your
business somewhere else. They want your business. A good time to make a
purchase is at the end of their fiscal quarter or year when they need to make
their target numbers.
Leasing is generally the best approach for acquiring capital equipment, as
it allows you to pay as you go, and you can preserve the capital you will need
to make the business grow. Most large companies have delayed or deferred
initial payment plans. If you buy or lease used equipment, which can save even
more money, make sure you do so from a reliable source. Get the warranty
in writing in case there are problems, and review it in detail before signing
any purchase agreement. If you buy anything used, it is best to assume that
something will go wrong. Make sure you are covered and there are no costly
surprises.
Potential revenue and anticipated growth projections are almost always
exaggerated by sales representatives. Be skeptical and conservative in your
predictions of how many patients you will treat in any given time period.
Do not spend all your capital on building out the facility and purchasing
equipment, because you will not have anything left over for the marketing
necessary to attract new patients. Develop an effective marketing plan. An
average product with great marketing will always beat out a great product
with average marketing. Your goal should be to have a great product with
great marketing.
As your medical spa grows, new devices and treatments will enter the
market. Be skeptical of new technologies and procedures. Do not be the first
one to jump on the bandwagon just so that you can offer something new
to your patients. Go with proven technologies from tried and true companies that will be around in the future to back and service their equipment.

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Research things exhaustively before considering a purchase, and do not buy on
impulse.

Products
What about retail products? There are many medical and spa grade skincare
products to choose from. Again, stick with well-known companies that have
products which are proven to work. Look for the science behind the product
claims. Patients want skincare products that will slow and reverse the aging
process. Limit the number of stock-keeping units (SKUs), or individual products, that you have in order to keep your inventory costs low and to simplify
choices for your clients. There is no need to stock seven different cleansers, five
different toners, and six different sunblocks from eight different companies.
Most large product vendors will extend volume discounts and rebates when
you hit certain purchase targets. If you are spreading your purchases out over
too many vendors, you will not be able to hit any of these targets. Do not feel
compelled to buy every product from every vendor. It is often better for your
inventory and simpler for the patients if you are selective and only carry what
you know you will sell.
Pick product vendors that have a short turnaround time for processing
orders and delivery, so that you do not have to stock a large inventory. Ask
about their policy for returned products if a patient has a reaction to it. Do
not get stuck with boxes of returned products and lose money on them.
Avoid the temptation to carry a product line that your clients will find on
the shelves at the local department stores and all the days spas in the area. Your
niche is medical, so focus on the medical grade products available only through
a physician’s office. Day spa products do sell well in a medical spa setting, so
it is OK to have a few select non-medical products to round out your product
selection and to compliment the facial and massage offerings, but start slow
and add things only if and when the demand for them materializes.

Should You Have a Medspa?
Now that we have discussed different aspects of a medical spa, should you
open one or not? Think very carefully about the risks and downsides before
you commit. Do not proceed under the assumption that if you build it they
will come; they will not. There is too much competition out there today. If
you build a huge, beautiful, elaborate facility that is fully staffed and offers

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everything available, you will have a huge money pit on your hands unless
you have the revenue and income to sustain it while it grows. Marketing and
acquiring market share to sustain a large operation takes a long time, stalwart
persistence, and high visibility in the community. You can have the greatest
medical spa out there but, without visibility, no one will come to your facility.
Consider that the complexity and time required to run and manage an
average-sized medical spa will far exceed that required to run a surgical practice. As the medical spa and your surgical practice grow, you may find that you
simply do not have the time and energy to manage and oversee the medical
spa. Anticipate this, and be prepared to hire someone capable of managing the
daily operations. As the medical spa grows, the demands will grow far beyond
what the busiest surgical practice demands. Consider having both entities in
the same physical location to allow sharing of resources and improved efficiency, especially when you are starting out. Then, have a long-term game
plan that allows for possible expansion and growth.
Before you move forward with opening a medical spa, your business plan
should give you an absolutely reassuring answer to the important question of
why a patient should choose to come to you over all the other competitors. It
should answer what you are going to do and what services you will offer, and
how your medical spa will set you apart from everyone else’s and ultimately
lead to tremendous success. Price is not the answer. Copying a business plan
out of a book is not the answer either. Look hard at what makes a business
successful. A great medical spa should address each of the following areas: the
patient experience, the physical setting, a system to assure predictable results
without complications, great customer service, and excellent management.
Failure to excel in any or all of these areas is a recipe for potential failure.
A well-executed business plan is critical to your success.

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Medical Inventions: From Idea
to Funding
Joshua M. Korman, MD, FACS

M

any people have good ideas. Physicians have a lot of good ideas, partly
because they are inquisitive people, but also because physicians see
opportunities in the course of their practice — things that could be done
differently or better. Many plastic surgeons are also entrepreneurial, so it is
logical to believe that plastic surgeons often come up with some clever ideas.
What is not so clear is what to do with a good idea. This chapter is designed
to help guide you through the process.
There is a well-publicized myth that some people thought the U.S. Patent
and Trademark Office should close at the start of the 20th century because
there was nothing left to invent. Ideas are like the universe, ever-expanding.
There is no shortage of good ideas; it is what to do with them that matters. There are big ideas such as personal computers and organ transplants,
and there are smaller ideas such as the pulse oximeter and the electrocautery
scratch pad. But they are all good ideas that got past the blood-brain barrier.
As a medical student in the early 1980s, I asked my chief resident in general surgery about using gynecological laparoscopic techniques to do general
surgery operations. He thought that was the dumbest idea he had ever heard
of. Obviously, I was not the only one who thought of that.

Step 1: A Good Idea
When you think of a good idea, write it down. Many famous people keep
notebooks close at hand to jot down anything that might be useful. Our
brains are like the freeway — we have so many things going on at the same
time that we may lose a passing thought unless we know when to get off the
exit. Somehow, the shower seems to be an excellent place to come up with
good ideas. Maybe it is the hot water on the scalp that stimulates the neuronal
connections. A really good idea seems hard to forget. It may start as a fleeting
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thought, but then when you least expect it, you think about it again. However
you come up with it, write it down and date it. This is useful for at least two
reasons: first, it puts the idea on your radar screen; and second, it documents
when you came up with the idea in case you need to prove it later on.

Step 2: Protecting Your Idea
There are many ways to protect your idea. You could just not tell anybody, but
then not much would happen to it. It is also useful to remember that most ideas
have been thought about before. In fact, many inventions and “discoveries” of
the last century were known thousands of years ago in previous civilizations.
They were just never patented thousands of years ago; it was the latecomers
who got the patents and received the credit (and the profits!). There is a section
in the Code of Ethics of the American Society of Plastic Surgeons which states
that a member may be subject to disciplinary action if “the member seeks
or obtains a patent for any invention or discovery of a method or process
for performing a medical procedure or employ trade secrets, confidentiality
agreements or other methods that limit the availability of medical procedures
and the dissemination of medical knowledge”.1 This means that should a light
bulb shine above your head, you should be as educated about the process as
possible.

Method vs. device patents
There are method patents and there are device patents. Method patents are
much broader and also harder to obtain. Device patents are narrower, but are
easier for a competitor to design around. In general, regardless of the type of
patent you apply for, patent attorneys will tell you that generally one patent is
just the center and then, as you grow, you build fences around the first patent
in the form of other patents.
When you apply for a patent, there is a little bit of a Catch-22. You do
not really know everything about your invention when you apply for a patent.
You want to put in as much as you can to start building the fence, but at
the same time you do not want to end up being your own prior art (an idea
of yours that blocks you from getting an additional patent later on). Before
you embark on protecting your idea, it is worth spending the money for an
hour to consult with a good patent attorney. There are many ways to get ideas
patented (online, etc.), but it is worth beginning with professional advice. Do
not be dissuaded by pessimistic patent attorneys, and do not be deluded by

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those who will take your money just to take you down the yellow brick road.
Ultimately, you need to get advice, but use it wisely.

The nondisclosure agreement
At the end of the chapter are two examples of nondisclosure agreements.
These are general agreements, which should be signed by anyone you tell
confidential information regarding your idea. Of course, all nondisclosure
agreements are only as good as the people who sign them. A lawyer I once
hired told me that when he worked as an attorney for a big medical device
company, they would hear ideas and then promptly figure out ways to design
around them. Nevertheless, it is important to get these agreements signed to
help prevent individuals from unwittingly divulging information. However, as
will be discussed later on, few venture capitalists will ever sign a nondisclosure
agreement, which is why patent applications are better done sooner rather
than later.

Step 3: Building a Prototype
Regardless of whether you are thinking about a method or device patent, you
should design a prototype first. Even if your idea involves complex machinery with an integrated circuit, you still should figure out a way to build a
“kluge” prototype to see if it will work. Think hardware store before you
think expensive industrial design company. Even before you make the trip to
the hardware store, try to draw out different ideas in your notebook. Date
everything, and remember that drawing is a very inexpensive way to make
progress. You have more information and knowledge than anyone else at
this point. Do not let practicality get in the way; reality will sink in soon
enough.
After you have drawn out a few different ideas, go to the hardware store
and get supplies to try to build a prototype. You will probably learn things
from that expedition. Afterwards, you can go back and forth between the
prototype idea and the drawing board. Do not ignore anything, and do not
cross anything off. Tracking every detail will help you refine your device.
At some point in this process, you will need to gain additional information.
With the use of the World Wide Web, you have access to a worldwide web
of information. As with patients learning more about plastic surgery, you will
find a lot of good information, but you will also encounter some confusing
and conflicting information. Eventually, you will need assistance.

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Lawyers are not the ones to help you design a prototype; they are there
to help protect your idea. Engineers are the ones who can help you work on
the device or improve your idea. There are many types of engineers (electrical,
mechanical, biomedical, industrial, structural, software), so you need to figure
out which kind you need. Mechanical engineers can generally help with tubes
and clips, while electrical engineers are better for wiring and electrical connections. Sometimes you need more than one kind of engineer to help make
your prototype, though it is probably best just to start with one. Remember,
they should definitely sign a nondisclosure agreement, and you will need to
figure out how much to pay them. They generally will not work for free, and
most seasoned engineers know not to take “stock” in exchange for their work
(usually there is no stock yet at this point, and promised stock is even more
questionable). Set an hourly rate or a not-to-exceed amount before they begin
work on the project.
While you are working on the prototype, you will learn more about how to
develop your idea. This is a good stage to begin work on the patent application.
Most companies will not look at anything unless a patent application has
already been filed, so start early. Patents take years to issue. You do not need
an issued patent to show it around, but an application is helpful.

Step 4: Proof of Principle
Once you have a prototype, the next step is proof of principle, which is when
you show that your device or method actually works. This is usually where
cost becomes an issue, especially with most medical devices because you bump
up against human subject issues. Unlike the proverbial “start the company in
the garage”, any device or system that you plan to market for human use
must be approved by the Food and Drug Administration (FDA). An entire
industry has been built around figuring out the best path to approval. Since
you absolutely cannot do it by yourself, you need expert help, and help costs
money. Proof of principle usually comes in the form of clinical trials, which is
another overwhelming process that requires assistance.
The FDA delegates Institutional Review Boards (IRBs) to act as their
agents for the first line of approval and clinical studies. There are IRBs set up
in many hospitals, but there are also independent IRBs to do clinical trials in
an outpatient and clinic setting. Before you go to the FDA or to the IRB, you
should think about the regulatory path for your device. Minimize your errors
because the clinical trial process is very costly. To begin, determine if your

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device is a non-significant risk (NSR) device or a significant risk (SR) device.
The decision, which is made by the investigator, is very important, as detailed
below from FDA guidelines:
The effect of the SR/NSR decision is very important to research
sponsors and investigators. SR device studies are governed by the
IDE regulations (21 CFR Part 812). NSR device studies have fewer
regulatory controls than SR studies and are governed by the abbreviated requirements [21 CFR 812.2(b)]. The major differences are
in the approval process and in the record keeping and reporting
requirements. The SR/NSR decision is also important to the FDA
because the IRB serves, in a sense, as the FDA’s surrogate with
respect to review and approval of NSR studies. The FDA is usually not apprised of the existence of approved NSR studies because
sponsors and IRBs are not required to report NSR device study
approvals to the FDA.3

The next decision point is to determine if your device requires a
510(k) Pre-market Notification, Investigational Device Exemption (IDE),
or Pre-market Approval (PMA) application submission. In general, a 510(k)
clearance is for devices that are basically like other devices on the market, do
not require invasive techniques, and have proven safe technology. A PMA
is the longest and hardest approval to get. Breast implants require PMAs
because they are “permanent” and they are placed inside a human. Breast
tissue expanders, on the other hand, are 510(k) devices because they are temporary and the materials used in them (saline, silicone envelope) have been
used for decades in a variety of technologies. As mentioned above, you cannot do this work alone; you need guidance and assistance from expensive
experts.

510(k) Pre-market Notification
This is the primary mechanism by which medical devices are accepted to the
market in the U.S. This notification is made under Section 510(k) of the
Federal Food, Drug, and Cosmetic Act, and shows the intention to manufacture a medical device for use in the U.S. market. Its purpose is to demonstrate
to the FDA that the device to be marketed is “substantially equivalent” to
another that was on the market prior to May 28, 1976, or to a device that has
already been accepted through the 510(k) submission process. Most devices,
unless they employ novel technologies or applications, can be submitted for
review under this process. The FDA will require data — descriptive data and

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performance data — to back substantial equivalence claims in order to support
this type of submission.
There are a number of variations to this process, e.g., the Abbreviated
510(k) for products conforming to agreed standards or the Special 510(k) for
changes to existing devices.

Investigational Device Exemption (IDE)
New devices cannot be used in human subject trials without prior permission
from the FDA and an Institutional Review Board. The application filed for
this approval is called an Investigational Device Exemption (IDE). It allows
for the investigational medical device to be used in a clinical study to collect
safety and effectiveness data, in support of a PMA application or a 510(k)
submission to the FDA. A device is:
An instrument, apparatus, implement, machine, contrivance,
implant, in vitro reagent, or other similar or related article, including a component part, or accessory which is: recognized in the
official National Formulary, or the United States Pharmacopoeia,
or any supplement to them, intended for use in the diagnosis of
disease or other conditions, or in the cure, mitigation, treatment,
or prevention of disease, in man or other animals, or intended
to affect the structure or any function of the body of man or
other animals, and which does not achieve any of its primary
intended purposes through chemical action within or on the body
of man or other animals and which is not dependent upon being
metabolized for the achievement of any of its primary intended
purposes.4

Pre-market Approval (PMA)
This involves the formal approval by the FDA regarding the safety and effectiveness of a medical device based on valid device-related scientific data, rather
than comparison data as in the 510(k) process. This process mostly applies to
Class III medical devices, which have the most novel and complex technologies. Applications are subject to rigorous scrutiny by the FDA.
For existing Class III devices, any changes to the product, the process,
or the indications for use must be approved by the FDA through a PMA
Supplement submission.
In short, the regulatory path is quite confusing, but having a clear regulatory path is crucial to the success of any medical invention. Knowing the basics
will help in beginning to ask the right questions of your experts. However, as
in tax preparation, it is best to have a general idea of the rules.

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Step 5: Getting Funding
Whether you are buying supplies at the hardware store for your first prototype
or trying to raise Series C (third round) venture capital funding, you still need
to ask the same questions: how much money do you need, and what do
you need the money for? The difference between the hardware store and the
venture funding comes down to how much money you should invest yourself
before you ask others for money. Several film producers are well known for
avoiding using their own money as an investment for making movies.

Your own money
Much of the decision to use your own money depends on how much you
believe in your idea. In general, if you do not believe in your idea, no one else
will either. Still, you do not want to spend every last penny of your own money
on this venture. Even if you think it is the greatest idea since the pyramids,
it is still a risky venture. The real question is, how far will your money get
you before you need more money? Set milestones which include things like
prototype, proof of principle, etc.

Money from relatives
It is not hard to find success stories where big companies were started by a
young entrepreneur who borrowed US$10,000 from his or her relatives to get
the business started. But it is equally important to remember that, for every
bright star, there are a thousand broken hearts on Broadway. Specifically, borrowing money from relatives is generally fraught with human relation obstacles. Nevertheless, it is important to figure out how far the money will go
and when you will need additional funds. For example, if your uncle Henry
lends you US$20,000 for 50 percent of the company, then the post-money
valuation is US$40,000 (since the price was set when he lent you the money
for a certain percentage of the company). This US$40,000 will be the “premoney” valuation before the next round of funding. If your Aunt Henrietta
(on the other side of the family) later puts in US$20,000 for 50 percent of
the company, the post-money valuation will still be US$40,000 (no bump-up
in value), but your Uncle Henry’s share will be diluted so that his ownership
after the Henrietta round will be 25 percent (half of what he had before). If,
however, value has been put into the company (such as making a prototype
or applying/receiving a patent), then the value for the company has gone
up, so you can perhaps convince Aunt Henrietta that if she wants to invest,

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the value has doubled, so the post-money valuation is now US$80,000. Her
US$20,000 will only buy 25 percent of the company. Uncle Henry would
need to put in an additional US$20,000 if he wants to maintain his percentage in the company. So, before you start taking money from relatives, make
sure you and they understand the complications that can arise while going
forward, both financially and emotionally.

Grant money
Entrepreneurs do not necessarily find grant money sexy, but it can often be
much more valuable money than venture capital. Grants tend to have deadlines, reports, milestones, and a long lead time from application to funding. In
addition, they give out amounts in the thousands, not the millions of dollars.
Obviously, there are several hurdles with grant funding, but they usually do
not have financial strings attached (you do not have to give away a percentage
of the company for the money). For example, the Defense Advance Research
Projects Agency (DARPA), an agency of the U.S. Department of Defense,
gives significant grants each year but, as with most grants, the lead time is
long and the chance of success is unpredictable.

Small business loans and bank loans
Bank loans can be good, if you can get them. The main problem is that you
generally need to personally guarantee those loans. You are already taking on
all the risk yourself, but you will not ultimately be rewarded with the value. In
the best case scenario, your loan will help you make enough progress to get
funded and the loan will get paid off, but you will not get any extra “credit”
for taking the loan out in the first place. Small business administration loans
are an excellent source of funding new businesses, but again, some amount of
collateral is often required and the risk to you increases.

Angel investors
These tend to be individuals or groups of individuals with “high capacity”
(people with money to invest who are looking for the next big thing). Many
are social networking groups or groups who fund early-stage companies. The
investments are usually up to a few hundred thousand dollars. Before taking
money from angel investors, make sure that they have access to larger investment pools for the next round. The good thing about angels is that, unlike

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venture funding, they are more likely to invest in ideas that do not necessarily
have a billion dollar future.

Venture capitalists
There is a reason they are called “vulture capitalists” or modern-day loan
sharks. They have money, and you don’t. You need their money, so they can
basically name their price. When choosing a funding source, it is better to take
money from someone who inherently brings value to your concept. What this
means is that while Aunt Henrietta was very nice to invest US$20,000 in
your project, she probably does not know too much about it. As a result,
she probably cannot find the right people to work on the project, get the
right board of directors, etc. Most importantly, when you need US$200,000
instead of just US$20,000, Aunt Henrietta will most likely send you on your
way, if you even have the guts to ask.
Venture capital companies have money — relatively lots of money. They do
not like investing a few thousand, or even a few tens of thousands, of dollars
into a company. It takes too much of their time. They want to find companies
which are just starting but have proof of principle, have no encumbrances (like
Aunt Henrietta), are going to make a gazillion dollars, whose market value is
US$500 million or more, have great patent protection, etc. In other words,
they want to minimize their risk. At the same time, legions of cheerleading
entrepreneurs are sure their idea will change the world and come knocking at
the venture capitalists’ doors in search of a few million dollars to make that
happen.
Medical devices are different from technology and other devices specifically
because of governmental regulation. Understanding your regulatory path is
crucial to your success with venture capitalists. Venture capital firms talk to
each other, and they generally play “Follow the Leader”. One firm will lead
the round and then go to other firms to load the boat of risk, and also to
establish a cabal to set the valuation. In this way, they basically decide how
much of your company you will have to give away to get their money.
Usually, entrepreneurs are grateful to have anyone give them the money
they think they will need. The days of companies like Microsoft are over, when
Bill Gates was able to give away only a relatively small amount of the company
for the first big tranche (infusion) of funds into the fledgling entity. It is not
unlikely to have to give up 50–80 percent of the company. What you are left

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with will be further diluted as the company requires further investment. It is
helpful to find investors who are able to invest further in future rounds. They
will do so to protect their investment (as in the Henrietta example above),
and to attract other investors at a higher price. This increases the value of the
company.
At the end of the day, companies go one of three ways: they go out of
business, they get acquired, or they go public. The vast majority of medical
companies that do not go out of business get acquired. However, when first
presenting the idea for the company to venture capitalists, it is a good idea to
think of a platform technology and show how your idea can support further
development of other products. Venture capitalists do not like a “one-trick
pony”. They think big. They are interested in companies with a potential
market value of over US$500 million.

Conclusion
Successful medical inventions begin as good ideas. But the good idea is only
the beginning of a road that is long and full of twists and turns. For surgeons
who are accustomed to quick decisions and actions, it is easy to get frustrated,
not only by the process, but also by the expense and the need to get help at
almost every step of the way. This tortuous route is designed to protect patients
and to bring new ideas to market. Those who persevere can sometimes find
success, and have the chance to see their idea spring to life.

References
1. American Society of Plastic Surgeons. Code of Ethics. 2009.
2. Zenios S. et al. Biodesign — The Process of Innovating Medical Technologies.
Cambridge University Press, 2010.
3. Food and Drug Administration (FDA). Significant and Nonsignificant Risk
Studies. FDA information sheet, October 1995.
4. Food and Drug Administration (FDA). IDE Approval Process. FDA information
sheet. Available at http://www.fda.gov/MedicalDevices/DeviceRegulationand
Guidance/HowtoMarketYourDevice/InvestigationalDeviceExemptionIDE/ucm
046164.htm/, July 2009.

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Recommended Reading
Zenios S et al. Biodesign — The Process of Innovating Medical Technologies.
Cambridge University Press, 2010.

Appendix A: Mutual Nondisclosure Agreement
This Agreement is made effective on ____ by and between ____ (first party)
and ____ (second party) (collectively, the “Parties”), to ensure the protection
and preservation of the confidential and/or proprietary nature of information disclosed or made available or to be disclosed or made available to each
other. For the purposes of this Agreement, each party shall be deemed to
include any subsidiaries, internal divisions, agents, and employees. Any signing party shall refer to and bind the individual and the entity that he or she
represents, whereas the Parties desire to ensure the confidential status of the
information that may be disclosed to each other.
Now, therefore, in reliance upon and in consideration of the following
undertakings, the Parties agree as follows:
1. Subject to limitations set forth in paragraph 2, all information disclosed
to the other party shall be deemed to be “Proprietary Information.” In
particular, Proprietary Information shall be deemed to include any information, marketing technique, publicity technique, public relations technique, process technique, algorithm, program, design, drawing, mask
work, formula, test data research project, work in progress, future development, engineering, manufacturing, marketing, servicing, financing,
or personal matter relating to the disclosing party, its present or future
products, sales, suppliers, clients, customers, employees, investors, or
business, whether in oral, written, graphic, or electronic form.
2. The term “Proprietary Information” shall not be deemed to include
information that (i) is now, or hereafter becomes, through no act or failure to act on the part of the receiving party, generally known or available
information, (ii) is known by the receiving party at the time of receiving
such information as evidenced by its records, (iii) is hereafter furnished
to the receiving party by a third party, as a matter of right and without
restriction on disclosure, (iv) is independently developed by the receiving party without reference to the information disclosed hereunder, or
(v) is the subject of a written permission to disclose provided by the
disclosing party.
(Continued)

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(Continued)
Not withstanding any other provision of this Agreement, disclosure
of Proprietary Information shall not be precluded if such disclosure:
a. is in response to a valid order of a court or other governmental body
of the United States or any political subdivision thereof,
b. is otherwise required by law, or,
c. is otherwise necessary to establish rights or enforce obligations under
this Agreement, but only to the extent that any such disclosure is
necessary.
In the event that the receiving party is requested in any proceedings
before a court or any other governmental body to disclose Proprietary
Information, it shall give the disclosing party prompt notice of such
request so that the disclosing party may seek an appropriate protective order. If, in the absence of a protective order, the receiving
party is nonetheless compelled to disclose Proprietary Information, the
receiving party may disclose such information without liability hereunder, provided, however, that such party gives the disclosing party
advance written notice of the information to be disclosed and, upon the
request and at the expense of the disclosing party, uses its best efforts to
obtain assurances that confidential treatment will be accorded to such
information.
3. Each party shall maintain in trust and confidence and not disclose to
any third party or use for any unauthorized purpose any Proprietary
Information received from the other party. Each party may use such
Proprietary Information in the extent required to accomplish the
purpose of the discussions with respect to the subject. Proprietary
Information shall not be used for any purpose or in any manner that
would constitute a violation on law regulations, including without limitation the export control laws of the United States of America. No other
rights or licenses to trademarks, inventions, copyrights, or patents are
implied or granted under this Agreement.
4. Proprietary Information supplied shall not be reproduced in any form
except as required to accomplish the intent of this Agreement.
5. The responsibilities of the Parties are limited to using their efforts to
protect the Proprietary Information received with the same degree of
care used to protect their own Proprietary Information from unauthorized use or disclosure. Both Parties shall advise their employees
or agents who might have access to such Proprietary Information of
(Continued)

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6.

7.

8.

9.

10.

315

(Continued)
the confidential nature thereof and that by receiving such information
they are agreeing to be bound by this Agreement. No Proprietary
Information shall be disclosed to any officer, employee, or agent of
either party who does not have a need for such information for the
purpose of the discussions with respect to the subject.
All Proprietary Information (including all copies thereof ) shall remain
the property of the disclosing party and shall be returned to the disclosing party within one week after the receiving party’s need for it has
expired, or upon request of the disclosing party, and in any event, immediately upon completion or termination of this Agreement. The receiving party further agrees to destroy all notes and copies thereof made
by its officers and employees containing or based on any Proprietary
Information and to cause all agents and representatives to whom or to
which Proprietary Information has been disclosed to destroy all notes
and copies in their possession that contain Proprietary Information.
This Agreement shall survive any termination of the discussion with
respect to the subject and shall continue in full force and effect until
such time as the Parties mutually agree to terminate it.
This Agreement shall be governed by the laws of the United States of
America and as those laws that are applied to contracts entered into and
to be performed in all states. Should any revision of this Agreement
be determined to be void, invalid, or otherwise unenforceable by any
court or tribunal of competent jurisdiction, such determination shall not
affect the remaining provisions of this Agreement, which shall remain
in full force and effect.
This Agreement contains final, complete, and exclusive agreement of
the Parties relative to the subject matter hereof and supersedes any prior
agreement of the Parties, whether oral or written. This Agreement may
not be changed, modified, amended, or supplemented except by a written instrument signed by both Parties.
Each party hereby acknowledges and agrees that, in the event of any
breach of this Agreement by the other party, including, without limitations, the actual or threatened disclosure of a disclosing party’s
Proprietary Information without the prior express written consent of the
disclosing party, the disclosing party will suffer an irreparable injury such
that no remedy at law will afford it adequate protection against or appropriate compensation for such injury. Accordingly, each party hereby
(Continued)

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(Continued)
agrees that the other party shall be entitled to specific performance
of a receiving party’s obligations under this Agreement as well as
further injunctive relief as may be granted by a court of competent
jurisdiction.
11. The term of this Agreement is for two (2) years after the date of last
disclosure of any Confidential and/or Proprietary Information, commencing on the “Effective Date.”
AGREED TO:
Signature
Printed Name:
Title:
Company:
Date:
AGREED TO:
Signature
Printed Name:
Title:
Company:
Date:

Appendix B: Nondisclosure Agreement
This Agreement is made effective as of ____ by and between ____ (hereinafter
the “Company”) and ____ (hereafter the “Receiving Party”), to assure the
protection and preservation of the confidential and/or proprietary nature of
information to be disclosed or made available by Company to the Receiving
Party in connection with certain discussions.
In reliance upon and in consideration of the following undertakings, the
parties agree as follows:
1. Subject to the limitations set forth in Paragraph 2, all information
disclosed by Company to the Receiving Party shall be deemed to
be “Proprietary Information.” In particular, Proprietary Information
shall be deemed to include any information regarding inventions, trade
secrets, patents, patent applications, know-how, discoveries, samples,
(Continued)

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(Continued)
formulations for producing any such sample, media and/or cell lines,
processes, formula or test data relating to any research project, work
in process, research and development plans, engineering, manufacturing, marketing, servicing, financing or personnel matter relating
to Company, its present or future products, sales, suppliers, clients,
customers, employees, investors or business, whether in oral, written,
graphic or electronic form. Proprietary Information shall also include
all third party information and information that Company has received
from others.
2. The term “Proprietary Information” shall not be deemed to include
information which the Receiving Party can demonstrate by competent
written proof: (a) is readily available to the public through no act of failure to act on the part of the Receiving Party; (b) is hereinafter furnished
to the Receiving Party by a third party, as matter of rights and without
restriction in disclosure; (c) is known by the Receiving Party at the time
of receiving such information, as evidenced by its records; or (d) is the
subject of a written permission to disclose provided by Company.
3. The Receiving Party agrees at all times during the term of this
Agreement and thereafter that it will take all reasonable steps necessary to hold all Proprietary Information in trust and confidence and
shall not disclose any Proprietary Information to any third party or
use any Proprietary Information in any manner or for any purpose not
expressly set forth in this Agreement. The Receiving Party may use such
Proprietary Information only to the extent required to accomplish the
intent of this Agreement.
4. The Receiving Party shall advise its employees who might have access to
Proprietary Information of the confidential nature thereof and agrees
that its employees shall be bound by the terms of this Agreement. The
Receiving Party shall not disclose any Proprietary Information to any
employee who does not have a need for such information, nor shall it disclose any Proprietary Information to any third party without Company’s
written consent.
5. No rights or licenses to trademarks, inventions, trade secrets, copyrights,
or patents are implied or granted under this Agreement. Proprietary
Information shall not be reproduced in any form except as required to
accomplish the intent of this Agreement.
(Continued)

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6.

7.

8.

9.

10.

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(Continued)
This Agreement shall continue in full force and effect for so long as
the Receiving Party continues to receive Proprietary Information. This
Agreement may be terminated by either party at any time upon thirty
(30) days’ written notice to the other party. The Receiving Party’s
obligations under this Agreement shall survive termination of this
Agreement and shall be binding upon Receiving Party’s heirs, successors, and assigns.
The Receiving Party agrees to indemnify Company for any loss or damage suffered as a result of any breach by the Receiving Party of the terms
of this Agreement, including any reasonable fees incurred by Company
in the collection of such indemnity.
This Agreement, together with Exhibit A attached hereto and hereby
incorporated herein, contains the final, complete, and exclusive agreement of the parties relative to the subject matter hereof and supersedes
all prior and contemporaneous understandings and agreements relating
to its subject matter. This Agreement may not be changed, modified,
amended, or supplemented except by a written instrument signed by
both parties.
The Receiving Party hereby acknowledges and agrees that in the event
of any breach of this Agreement by the Receiving Party, including,
without limitation, the actual or threatened disclosure of Proprietary
Information without the prior express written consent of Company,
Company will suffer an irreparable injury such that no remedy at law
will afford it adequate protection against, or appropriate compensation for, such injury. Accordingly, the Receiving Party hereby agrees
that Company shall be entitled to specific performance of the Receiving
Party’s obligations under this Agreement, as well as such further relief
as may be granted by a court of competent jurisdiction.
The parties’ right and obligations will bind and insure to the benefit of their respective successors, heirs, executors, and administrators
and permitted assigns. This Agreement shall be governed by the laws
of the State of California, excluding its conflicts of laws principles. If
any provision of this Agreement is found by a proper authority to be
unenforceable, that provision shall be severed and the remainder of this
Agreement will continue in full force and effect. Any notices required
or permitted hereunder shall be given to the appropriate party at the
address specified below or at such other address as the party shall specify
(Continued)

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(Continued)
in writing. Such notice shall be deemed given upon the personal delivery,
or sent by overnight courier upon written verification of receipt, or
certified or registered mail, return receipt requested, upon verification
of receipt.
IN WITNESS WHEREOF, the Receiving Party has executed this
Agreement as of the date first above written.
Agreed To (Company):

Agreed To (Receiving Party):

________________________
Signature
________________________

________________________
Signature
________________________

________________________
Address

_______________________
Address

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Part IV
Watching Your Back

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Contracts
Carol K. Lucas, Esq.∗

E

very medical practice will inevitably be a party to a number of contracts, including contracts among the practice and its owners, employment and independent contractor agreements with physician and ancillary
staff, leases, and financing agreements. In addition, many plastic surgeons may
be presented with management services agreements, managed care contracts,
or surgery center or spa agreements. Of these contracts, some are printed
form contracts, the form and terms of which are dictated by the other party.
Examples of these are equipment leases, standard bank loan and note documents, and office leases. Others are individually prepared and negotiated to
address the desires and concerns of the contracting parties. Either way, it is
important that physicians read and understand all of their contracts prior to
signing them. It is also important that contracts be clear and unambiguous.
History teaches us that contracting parties often develop disagreements. In a
perfect world, those disagreements are resolvable by the terms of the contracts.
If contracts do not resolve the dispute or provide a mechanism for resolving
the dispute, they have failed in their purpose.
This chapter surveys some of the more important and common contracts
that medical practices (or their physician owners) enter into. It will discuss,
among others, entity contracts (i.e., partnership and shareholder agreements),
employment and independent contractor agreements, and management services agreements.

Entity Contracts
Any medical practice that is not a sole proprietorship of a single physician
should have a written agreement among its owners. A medical practice may
∗ The author gratefully acknowledges the generous assistance of Marilyn Marchello Bautista,

Lecturer, Stanford Law School, USA, with this chapter.

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be organized as a corporation, a partnership, a limited liability company, or
a limited liability partnership. The legal form that a medical group will take
is dictated, at least in part, by state law. In California, for example, medical
practices must be organized either as professional corporations or as general
partnerships. Other states permit medical practices to be organized as limited
liability companies or limited liability partnerships. This agreement addresses
matters such as the financial relationship among the owners, governance of the
entity, professional expectations of the owners, exit strategies, and agreements
not to compete. Each of these areas is discussed below.

Financial matters
Whether the practice is organized as a corporation (in which case the applicable document is a shareholders’ agreement) or a partnership (in which case
the applicable document is a partnership agreement), the contract among the
owners of a medical practice will necessarily address the financial relationship
among the owners. The agreement should specify the contribution, either
in cash or in property, of each owner. If ownership interests will be sold to
additional physicians over time, the agreement should address how the buy-in
price will be determined. The agreement will also need to address the relative
ownership of each of the owners. Some partnerships and professional corporations require that each physician owner have an equal ownership interest.
Others permit some owners to have a greater ownership interest, as a result of
either seniority or service to the group. This structure is frequently employed
when a junior partner is brought into the entity. That junior owner may or
may not gradually achieve equal percentage ownership over time.
The entity agreement will also need to address how the entity compensates its professional owners and how its profits are divided. Because medical
practices are professional services organizations, there are two components
of the amount it distributes to its owners. First, each medical practice must
address how the physician owners, who are practicing medicine on its behalf,
are compensated for their efforts. Second, the owners must address how profits (if there are any) are distributed after all expenses are paid.
A medical practice entity may compensate its owners for their professional
services almost any way that it wishes (subject to Stark Law and Anti-Kickback
Law restrictions in the case of Medicare and other federal program patients,
as discussed at the end of this chapter). Generally, physician owner compensation is related in some fashion to the productivity of the physician. Such
arrangements run the gamut from a pure “eat what you kill” system in which

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the physician is paid his or her collections, less his or her overhead, to a more
elaborate system in which each professional employee is paid a stated salary
and is entitled to share in a bonus pool based on productivity as well as intangible factors that may relate, for example, to administrative services rendered
to the entity.
Profit distribution generally mirrors ownership percentage. However, in
entities where each physician owner owns the same percentage of ownership
notwithstanding differences in contribution to the entity, profits may be distributed not in accordance with strict ownership but on a basis that takes into
account ownership, contribution, and seniority, among other factors. It should
be noted that distributions on a basis other than strict ownership are easier
to effect in a partnership than in a corporation. Most corporate law requires
that dividends be paid to shareholders equally based on the number of their
shares. In this instance, differential distribution of profits is accomplished by
re-characterizing some profit as compensation, generally bonus compensation. If the entity is a corporation that has not made a Subchapter S election,
it is desirable to distribute as much as possible of the profit as bonus compensation rather than recording it as income. Bonus compensation, assuming
that the Internal Revenue Service (IRS) does not view it as clearly excessive,
is a deductible expense, whereas a business corporation’s income is taxable.

Governance
It is possible in the entity agreement to completely divorce governance issues
from financial issues. That is, even if all owners own an equal percentage
of the entity, the entity agreement — whether a partnership agreement or a
shareholders’ agreement — frequently sets forth detailed provisions regarding
the governance of the entity. For example, a shareholders’ agreement will
generally specify the number of members of the board of directors and how
they are selected. If the entity has a relatively small number of owners, each
will generally serve on the board. If there are only two owners, a shareholders’
agreement will frequently specify a board of three in order to avoid deadlocks
and will specify the selection process for the third director.
In partnerships and limited liability companies, the governing agreement
may provide for an elected board or a management committee or even a
single managing partner. In those instances, the agreement also specifies the
responsibilities and authority of such body or person. Most entities are wise to
devote a fair amount of time and attention to governance provisions. Although
partners may believe that they will always govern by consensus, it frequently

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happens that interests and opinions diverge and entities can become deadlocked, adversely affecting the business as a whole.

Professional expectations
Many professional entities incorporate provisions into the entity agreement
that would otherwise appear in the owners’ employment agreements. For
example, a medical practice shareholders’ agreement frequently includes provisions regarding the minimum time commitment expected of physician owners, maximum vacation time allowed, continuing legal education (CLE) time
and reimbursement, and similar terms. In these instances, the shareholders’
agreement or partnership agreement will also address termination events for
physician owners. These events must be carefully drawn and unambiguous.
A temptation exists in the case of any acrimonious termination for the terminated physician owner to sue for wrongful termination. In those instances,
the termination provisions of the agreement will be crucially important.

Exit strategies
Entity agreements vary in their handling of departing owners. Almost all provide that the ownership interest of a physician owner who dies, becomes disabled, or loses his or her license is subject to repurchase by the entity. In many
states, repurchase is mandatory on a physician’s loss of license because only
a licensed physician is eligible to own an interest in the entity. In agreements
that provide for mandatory repurchase upon certain events, including but not
necessarily limited to death, disability, and loss of license, the agreement must
specify the terms on which the interest will be repurchased. Some agreements
provide for a repurchase price based on an appraisal, although this can be a
cumbersome and expensive process. Others delegate to the board of directors
the responsibility to set the value of shares prospectively on an annual basis, so
that the determination is made before anyone knows whose shares it will apply
to. Still other entities use a price formula based on the entity’s financial performance, generally measured by its earnings before interest, taxes, depreciation,
and amortization (EBITDA).
Other mandatory repurchase events include retirement, relocation out of
the area or where competition is prohibited, and breach of the covenant not
to compete. Some entity agreements also provide repurchase upon failure of
a physician owner to practice in accordance with the group’s standard of care
or other subjective, qualitative measures.

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Aside from involuntary repurchase, most entity agreements prohibit transfers without consent and generally provide a right of first refusal. In instances
where there are only two or a small number of owners, owners may put in
place mutual buy/sell agreements, which are intended to permit separation
of the physicians without permitting either owner to “game” the other.

Covenants not to compete
Most entity agreements contain some form of exclusivity agreement or
covenant not to compete. The least restrictive of these is generally an agreement during the time a physician employee is an owner of the entity that he
or she will practice medicine exclusively for the entity and will not participate
in other practices within a particular radius of the entity’s practice sites. Many
entity agreements also extend the covenant not to compete for a period of
time from one to three years following termination of the physician owner’s
ownership interest. Not all states will enforce post-termination covenants.
However, even California, which generally severely disfavors covenants not to
compete, will permit them to be enforced when a physician sells all of his or
her interests in the business. It is important that such sale be a genuine sale at
a price that includes the value of the entity’s goodwill. Courts in California,
for example, hold that, where physician owners are all issued the same modest
percentage of ownership at a nominal price to buy in and a nominal price on
exit, the ownership arrangement is a sham and the covenant not to compete
is unenforceable.
In instances where an entity agreement contains a covenant not to compete, courts will generally only enforce them to the extent that they are reasonable in geographic scope and duration. Therefore, it is incumbent upon
the owners to determine how large an area is really necessary to protect the
entity’s practice. The enforceable non-compete radius in a high-density urban
environment, for example, will be much smaller than in a low-density rural setting, where patients will presumably drive farther to obtain health services. A
covenant that provides reasonable protection to the entity for one year may be
viewed as unreasonable (and hence unenforceable) if it restricts the activities
of a departing owner for multiple years.
It is also important in drafting these provisions to clearly specify what
is considered a competing business. Many entity agreements distinguish
between merely practicing medicine on the one hand and owning or managing a competing entity on the other. Similarly, activities other than the
strict practice of medicine may or may not be covered by the covenant. Entity

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owners should determine exactly what they wish to restrict, and assure that
the language in their agreement is precisely and narrowly drawn to accomplish
that goal.

Medical practices vs. ambulatory surgery centers
In most instances, medical practice entity agreements are different from the
agreements governing ambulatory surgery centers. With medical practices,
the owners are generally more integrated and the practice represents all or
nearly all of their practice activities. Whether organized as a corporation, limited liability company, or partnership, the entities are essentially partnerships
and their professional owners tend to view themselves and each other as partners. With an ambulatory surgery center, the entity will generally represent a
secondary relationship. Physicians invest in surgery centers for a number of
reasons, primary among them being investment returns and surgical convenience. However, the relationship among the owners of an ambulatory surgery
center is primarily that of promoter or investor than that of partner.
Ambulatory surgery centers, whether organized as limited partnerships,
limited liability companies, or corporations, are generally managed by a relatively small group of owners who may be commercial operators or physicians. Most physicians who purchase an interest in the surgery center do so
as investors. They do not expect to be actively managing the surgery center;
rather, they are looking for a convenient place to do surgery and a return on
their investment.
Because of these differences, and because physicians are referral sources
to surgery centers, surgery center agreements generally require that physician investors purchase their interest at fair market value; that the surgery
center not finance the purchase of the interest; that all distributions be made
strictly in accordance with ownership; that all physician investors have an equal
opportunity to invest; and that, on repurchase of a physician investor’s interest, the price represents fair market value, frequently expressed as a multiple
of EBITDA.
Governance in surgery center documents generally vests in a general partner or manager the responsibility to manage the entity and the surgery center.
Most surgery center entity agreements permit physician investors to vote on a
limited number of fundamental matters. Otherwise, they are generally treated
as passive investors with no say in management. The specific list of matters on
which surgery center investors may vote is frequently determined with reference to state law, but generally includes dissolution, sale of all or substantially

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all of the entity’s business, removal of a general partner or manager, addition
of a new or substitute general partner or manager, and continuation of the
entity following loss of the sole remaining general partner or manager.
Surgery center entity agreements also generally contain regulatory requirements, such as a requirement that physician investors certify compliance with
the ambulatory surgery center safe harbor under the federal Anti-Kickback
Law (discussed below), that they agree to disclose their ownership interest to
patients and payers, and that their decision to perform a particular procedure
at the surgery center is based on their professional judgment and not upon
any payment for referrals.

Employment and Independent Contractor
Agreements
At one time or another, most medical practices will bring in additional professionals, either as employees or as independent contractors. Generally, if a
physician is expected to work full-time and exclusively for the practice, he or
she will be characterized as an employee. If the physician is working only parttime and renders similar services at other locations, he or she will most likely
be an independent contractor. Sometimes, full-time physicians prefer to be
treated as independent contractors because they receive their gross compensation without withholding and because, as self-employed professionals, they
are able to deduct business expenses that are not deductible for employees.
However, for the employer, it is risky to characterize someone as an independent contractor if they are, in fact, an employee. It exposes the employer
not only to employment taxes that remain unpaid, but also to interest and
penalties. Consequently, employers should consult their tax advisors and/or
accountants regarding IRS requirements for independent contractors’ status.

Employment contracts
Even if a physician employee is an at-will employee, meaning that the employer
can terminate the employment at any time without cause, it is advisable for
the employer and employee to enter into an employment agreement that
sets forth the terms of the employment, including duties and responsibilities, compensation, benefits, termination events, authority of the employer,
and administrative responsibilities. In addition to the listed items, physician
employment agreements also frequently address such matters as responsibility

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for call, non-solicitation of patients and employees, dispute resolution, and
responsibility for tail coverage on termination.
With respect to duties and services, the employment agreement generally
spells out practice location, what is meant by “full-time” (i.e., 4 days, 41/2 days,
5 days, etc.), working and on-call hours, and the fact that the employee is serving in the employer’s medical practice. As a practical matter, the employment
agreement should explicitly require the employee to conform to the standards
and practices established by the employer from time to time. The agreement
should also explicitly require the employee to cooperate with any administrative procedures that may be adopted by the employer regarding the services
being provided. Finally, the agreement will explicitly state that all charts and
medical records are the property of the employer and that the employer is
entitled to all fees for professional services collected. Many physician employment agreements also explicitly require the employed physician to submit, on
a timely basis, charge sheets, face sheets, and other documentation necessary
for billing.
Compensation may be stated as salary alone, salary plus an incentive component, or compensation determined by a formula. If the agreement uses a
formula to determine the employee’s compensation, it is important that the
terms be defined and that the formula be clearly set forth, so that both parties have the same understanding of how the formula will be applied during
the term of the employment. The ability to pay employees on a basis that
takes into account their productivity is a benefit of employment, as opposed
to independent contractor status. Under the Stark and Anti-Kickback Laws,
and under many state laws, percentage-based compensation is legal if the person receiving it is a bona fide employee, but may constitute fee splitting or
payment for referrals if the person receiving it is an independent contractor.
The employment agreement should clearly specify the benefits that the
employed physician will be entitled to receive, including (as applicable) vacation time; health insurance; pension or other retirement plans; and expense
reimbursement for items such as licenses, medical staff dues, continuing medical education (CME), and publications. In addition, the amount of time off
that a physician employee may take for CME should be specified. Some physician employment agreements include time off for CME as part of vacation
time; others list it separately.
Although many states will not enforce a non-competition agreement following termination of employment, most states will enforce ongoing confidentiality and non-solicitation covenants. Thus, the physician employment
agreement will generally specify that the employee has no interest in the

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employer’s confidential information, including patient and referral source
names and contact information. The agreement will generally prohibit the
physician employee from using or disclosing such information. Finally, physician employment agreements generally prohibit the employee, on termination, from soliciting either the employees of the medical practice or the patients
of the medical practice.
Most physician employment agreements contain a specified term of at least
one year, which may be automatically renewed if not affirmatively terminated
by either party. They frequently provide for termination without cause on 30
or 60 days’ prior written notice. They also always provide for immediate termination on the occurrence of certain events, including loss of license, death
of employee, conviction of the employee of a felony or any crime of moral
turpitude, failure of the employee to qualify for malpractice insurance, and failure of the employee to maintain an active Drug Enforcement Administration
(DEA) number. In addition, most physician employment agreements are
also terminable upon breach of the terms of the employment agreement
and/or upon a determination by the employer that the employee has violated any code of ethics established by the employer or that the employee
is engaged in illegal drug use or substance abuse. Under the doctrine of
respondeat superior, the employer will be liable for torts committed by the
employee, so all of these termination events are necessary to protect the
employer.
Physician employment agreements frequently contain arbitration provisions. Because of court decisions designed to protect employees from abusive
dispute resolution mechanisms, care should be taken to conform any employment agreement arbitration provision to applicable state law. In California,
for example, it is necessary to provide that the employee will not be liable for
any expenses of arbitration greater than the cost of filing an action in court.
In many instances, physician employment agreements also address the
future possibility that an employee will be offered an ownership interest in
the practice. If this matter is addressed in a physician employment agreement,
it should be clearly stated to be in the discretion of the employer and to be an
offer that “may” be made rather than “will” be made. Frequently, employees
request that provisions like this be inserted into their employment agreements with a time frame for consideration. From the employer’s perspective,
the lesser detail that accompanies this statement of potential ownership, the
better it is. No medical practice will know in advance whether a particular
employee is a good fit, either clinically or culturally, and it is always better for
the practice to keep its options completely open.

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Almost all physician employment agreements require the employer to provide malpractice insurance for the employee. However, physician employment
agreements differ widely with respect to the responsibility to procure tail insurance on termination. Some employment agreements require the employer to
obtain and pay for tail coverage, regardless of the reason for the termination.
This approach makes some sense, because the employer is protecting itself
(i.e., the practice) from liability for claims made after the employee leaves.
Other agreements require the employee to obtain tail coverage in all instances.
This approach is risky, because the employee may fail to do so and the practice may be exposed. Still other agreements require the employee to obtain
tail coverage if the termination is for cause or if the employee quits, and the
employer to procure tail coverage if the practice terminates the agreement
without cause. For the reasons noted above, this may also expose the practice to some risk. In the instances where the employee is required to provide
tail coverage, the agreements generally permit the employer to procure it on
failure of the employee to do so and to demand reimbursement. However,
reimbursement may not always be easy to obtain, especially if the employee
moves out of state.

Independent contractor agreements
As noted above, independent contractor agreements are generally used for
part-time, specialty services. In many respects, their terms are the same as
those of employment agreements, with the following exceptions.
In an independent contractor relationship, the contractor physician may
do his or her own billing and may own his or her own charts (if this is not
the case, it may provide inferential evidence that the contractor is actually an
employee). The contractor physician will generally not receive any employment benefits, including malpractice insurance. Frequently, contractor physicians are required to provide certificates or other evidence of malpractice insurance at the inception of the agreement and periodically thereafter.
Compensation of independent contractor physicians is generally on a perhour or per-day basis. As noted above, regulatory considerations militate
against paying an independent contractor physician on a percentage basis.
Independent contractor agreements generally specify that the relationship between the practice and the contractor physician is that of independent
contracting parties, and specify that neither party may bind the other. The
term is usually for at least one year, and it may or may not be automatically renewed. Generally, in the case of physician independent contractors,

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the termination provisions are the same as for physician employees. There
is generally a without-cause termination provision as well as a provision for
immediate termination upon the occurrence of certain events.

Ancillary professionals
Physicians frequently desire to employ ancillary professionals and/or licensees
in their practices. For plastic surgeons, such persons could include those
responsible for providing aesthetic services in the physician’s office or a medical spa, including nurses and aestheticians. Frequently, such persons desire to
be treated as independent contractors and many may not work in the practice
full-time. However, as noted above, if such persons are to be compensated
on a percentage-of-collections basis, they must be employees and not independent contractors. Compensating independent contractor aestheticians or
nurses on a percentage basis could expose the physician to liability for fee
splitting. If such persons are independent contractors, they can be compensated on an hourly or fee-schedule basis, but should not be compensated on
a percentage basis.
It is also important that the employment or independent contractor agreement between the practice and such persons clearly specifies their responsibilities, the expectations that they are required to meet, and the terms upon
which the agreement can be terminated. Like physician employment agreements, such agreements should specify that they are terminable in the event of
any licensure action with respect to the employee and are terminable immediately in the event that the practice becomes concerned about the safety of
its patients.

Outsourcing Administration: Management,
Billing, and Marketing Agreements
Management, billing, and marketing agreements allow a physician practice
to outsource various functions. Of the three, the management agreement is
generally the most extensive. It often provides for a management company to
assume responsibility for all non-professional aspects of the physician’s practice, including employees, equipment, supplies, billing, personnel, accounting,
and marketing for the practice. Billing agreements and marketing agreements
represent more specialized services agreements; rather than contracting out
all administrative aspects of the practice, these agreements deal only with welldefined and specific functions.

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The most important provisions in any of these agreements are the description of the services, the termination provisions, and the compensation provisions. With respect to the description of the services, it is vitally important
that the agreement be as complete and precise as possible. In a management
services agreement, this requires spelling out all non-professional aspects of
the practice and generally specifies whether the medical group or the manager
has control over the various functions. For example, if the manager is responsible for financial functions, the agreement should specify that the manager
will provide bookkeeping and accounting services, will provide reports to the
medical group, will reconcile the medical group’s records with its bank statements, will supervise the medical group’s outside accountants, and so on. In
the case of supplies, the agreement should specify whether the manager or the
medical group is entitled to decide which supplies and which equipment are
purchased. Frequently, once the manager and the medical group have agreed
upon an annual budget, the manager is authorized to purchase equipment,
supplies, and services in accordance with the budget, and is only required to
obtain the group’s authorization for items exceeding the budgeted amount
by a specified dollar amount or percentage.
The management services agreement should specify which employees are
the responsibility of the management company (i.e., receptionists, billers, etc.)
and which employees are to be employed by the medical group. Generally,
the medical group is responsible for all professional employees, which certainly include physicians and may also include nurses, physician assistants, and
technicians.
The term of a management agreement is frequently heavily negotiated.
Management companies, especially management companies that invest significant resources in a particular practice, generally seek a long term for the
management agreement, such as 10 or even 20 years. Practices, conversely,
generally do not like to be locked in for this long a term and negotiate for a
shorter term. As important as the term itself are the termination provisions.
Again, in instances where the management company has invested significant
resources, it frequently attempts to limit termination events to termination
for cause; if the agreement permits termination without cause, the notice
period is generally fairly long, such as 180 days. The medical group, on the
other hand, may agree to a very long-term management agreement if it has
the ability to terminate the agreement without cause, either from inception
or from a designated point by which time the parties assume that the manager has recouped its investment. For example, the management agreement
could provide that the agreement is terminable only for cause for the first five

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years, and then may be terminated by either party without cause on 90 days’
notice. As with employment agreements, it is important that the events giving
either party grounds to terminate the agreement be clearly identified. Having
vaguely worded cause events will almost certainly lead to litigation if one party
(usually the manager) wishes the agreement to continue.
Compensation is an extremely sensitive area in management agreements.
If the practice provides services to any federal program patients, the federal
Anti-Kickback Law generally prohibits percentage-based management fees,
although most management arrangements are on a percentage basis. Similarly,
many state laws address whether a percentage fee is appropriate. For example,
California Business and Professions Code Section 650 provides that a fee for
management services may be based upon a percentage of gross revenues as
long as the fee bears a reasonable relationship to the value of the services.
Notably, the percentage must be based on gross revenues rather than net revenues, and the compensation must be reasonable. Most healthcare lawyers
therefore advise both the management services organization and the practice
(because either party could encounter regulatory trouble from these agreements) to carefully document not only all the services that are provided, but
also the charges that would be made by other parties for similar services in
the area. This careful accounting is important in connection with management agreements because a referral relationship frequently exists between the
practice and the management company.
Billing arrangements are almost always compensated as a percentage
of collections. Generally, this does not raise the same regulatory concerns
because there is no referral relationship between medical groups and their
billing companies. Almost all medical billing contracts provide for percentage
compensation.
The most important consideration with a billing agreement is to clearly
state the compensation formula. It is very easy to calculate a percentage of
collections. However, the agreement should also address whether the billing
company or the practice is responsible for amounts recouped as overpayments
or other refunds. The agreement should also clearly specify whether or not
the practice can adjust or write off billed amounts, and on what terms.
Marketing agreements raise significant regulatory issues because, by their
nature, marketers are being paid for referrals. If the practice provides services
to Medicare or other federal program patients, it must be cognizant of the
Anti-Kickback Law, which prohibits payment for referrals of business that can
be paid for by a federal healthcare program. Therefore, practices that have
Medicare patients either restrict marketing activities to non-federal program

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patients or pay marketers on a basis other than percentage of collections from
patients they originate. For this reason, when management agreements include
marketing services, even if the management agreement is paid on a percentage
basis, marketing services will frequently be carved out and paid on another
basis, such as hourly or cost-plus.
Aside from compensation, the most significant issue in a marketing agreement is whether or not the practice will have approval rights on advertising
and marketing activities. It is vitally important that the practice be able to
veto advertisements or marketing events that are viewed by the practice as
unseemly or misleading. This oversight ability is especially important because
many states regulate physician marketing, and the practice will be held responsible for the content of the advertisements.

Sharing Space with Other Physicians:
Overhead Sharing Agreements
It is not uncommon for physicians to share office space and support services
without joining their practices. Sometimes, the arrangements are as simple as
a sublease agreement between the physician who leases the office suite and
another physician who takes over a portion of the suite such as an office and an
examination room. However, because a subtenant also probably uses certain
services in the suite, such as reception, patient sign-in, supplies, and laundry,
for example, it is generally better practice to enter into an overhead sharing
agreement than a simple sublease. The reason for this is that almost all physicians who share office space have a referral relationship. Under the Stark and
Anti-Kickback Laws, described below, it is illegal for physicians to pay or accept
payment for a referral. When two physicians are in a referral relationship, then,
it is important that their financial relationship strictly reflect the fair market
value of items and services exchanged between them. If a subtenant uses services other than space in a physician office suite and does not pay for them,
such subtenant is arguably receiving a benefit which could be characterized as
a payment for referrals to the sublessor. In determining each physician’s share
of expenses, both fixed and variable expenses should be included. Purely separate expenses of the incoming physician (such as stationery) should be borne
by that physician alone and should not be shared.
Overhead sharing agreements address each of the items and services that
the parties are sharing, including but not limited to space and employee time,

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and divide the cost of such items and services strictly in accordance with usage.
Thus, if one physician is using 40 percent of the suite full-time, that physician
will generally pay 40 percent of the expenses. If one physician is using 40
percent of the suite half-time, such physician will generally pay 20 percent of
the expenses.
Because parties to an overhead sharing agreement have not integrated
their practices, care should be taken in the agreement to delineate the areas of
authority (if any) that one party will have over the practice of the other. For
example, it sometimes happens that one physician’s employee will disrupt the
staff or patients of the other. The overhead sharing agreement should state
the mechanism for addressing issues such as these.
Also, because physicians who are sharing an office suite have not integrated
their practices, it is important for the overhead sharing agreement to address
the issue of signage, telephone answering, and stationery. If the parties are
not careful to maintain the separate appearance of their practices, they can
become de facto partners, which could render one financially responsible for
the actions of the other. Frequently, such office suites will post a sign on the
front desk indicating that the physicians in the suite are not part of a single
practice in order to avoid confusion.

Managed Care and Insurance Contracts
As noted above, provider agreements with insurance companies or health
maintenance organizations (HMOs) are examples of contracts that are not
highly negotiable. While a physician may have an opportunity to negotiate
price, most of the terms are standardized across all of a carrier’s contracts and
are unlikely to be modified in a particular instance.
Because insurance contracts are not generally negotiable, it is important
for a physician who signs one to be aware of his or her responsibilities under
it. Insurance contracts are generally very specific and detailed regarding procedures to be followed by the physician in terms of authorization and claims
payment. Frequently, such contracts will also specify responsiveness standards,
such as the maximum amount of time before a patient’s call is returned and
the maximum waiting time for an appointment. It is important for any physician signing such a contract to be aware of these requirements and to be sure
that the office is capable of satisfying them.
Other issues to watch out for in an insurance contract include the “silent
PPO”. This term describes a contractual provision under which a physician,

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by virtue of signing a single contract, has agreed to participate in multiple
networks. On the one hand, this can result in additional volume to the
physician, in which case it could be a good thing. On the other hand, it
widens the circle of payers to whom the physician has agreed to give discounted pricing. There might also be “most-favored-nation” clauses, which
obligate the physician to give the carrier the best price he or she has agreed
to give any payer.
Physicians should also be careful about entering into exclusive arrangements. Carriers frequently desire to use a physician’s name and reputation
to enhance the perceived quality of their networks, and for that reason will
require a physician to contract only with them. Obviously, the physician should
think twice about entering into an exclusive arrangement with any carrier that
controls only a small amount of business, because the benefit is unlikely to
outweigh the burden of such an arrangement.

Boilerplate Contract Terms
Many non-lawyers consider the miscellaneous provisions at the end of almost
all contracts to constitute boilerplate, which is not important to the parties
or to the way a contract would be interpreted. In many instances, this is a
misconception. The following provisions, typically included in the general or
miscellaneous section of contracts, can have a significant effect on the parties
to the contract.

Amendment
Not all contracts require agreement by all of the contracting parties to amend
them. To the extent that a contract may be amended by fewer than all of the
parties, it is important that each party understands that the contract can be
amended without his or her consent. This amendment provision also generally specifies that amendments must be in writing and signed by the parties to be charged. Contracting parties frequently agree among themselves to
change a contract’s requirements. If the amendment provision specifies that
amendments must be in writing, these changes may or may not be enforceable modifications of the contract. It will frequently depend upon whether one
party renders performance in reliance upon the amendment; in that event, the
other party will generally not be excused by virtue of the amendment being
purely oral.

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Assignment
Most assignment provisions prohibit assignment without consent of the other
party. A common exception is assignment to a party’s affiliate or successor
organization. Any practice that may undergo a reorganization should have
this exception in its assignment provision.

Attorneys’ fees
The general American rule is that each party pays its own attorneys’ fees. Some
contracts provide that the prevailing party’s attorneys’ fees will be paid by the
losing party in the event of a dispute. This provision can be a double-edged
sword. Most contracting parties do not know ahead of time whether they will
prevail or not in a particular dispute. The exposure for not only that party’s
own attorneys’ fees, but also the other party’s attorneys’ fees, can wind up
magnifying the significance of a dispute far beyond the merits of the dispute
itself. In close cases, the presence of an attorneys’ fees provision may prevent
a contracting party from attempting to assert its contractual rights in the
first place. Alternatively, the in terrorem effect of an attorneys’ fees provision
can sometimes prompt disputing parties to work out a resolution short of
litigation.

Dispute resolution
Many contracts include dispute resolution provisions. These provisions may
be as simple as declaring that all disputes between the parties will be resolved
by binding arbitration. Other dispute resolution provisions specify preliminary
steps such as good-faith informal attempts to resolve the parties’ differences
and then mediation.
Contracting parties should be aware that binding arbitration, although
speedy and generally less expensive than litigation in court, may not be beneficial to them. If a dispute is litigated in court and the judge makes an error
of law, the aggrieved party can appeal. In arbitration, there is no appeal.
Arbitrators may or may not apply the law strictly to the facts before them
and may apply the law erroneously. Furthermore, many arbitrators have a tendency to “split the baby” — a practice in which the arbitrator attempts to
arrive at an equitable resolution that gives each party something, rather than
necessarily strictly applying the law. While this can be a benefit to the party
who would lose under the law, it is frequently frustrating to a party who is

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legally in the right. Consequently, parties should consider arbitration carefully
and should not automatically agree to it.

Entire agreement/integration
An integration provision is seemingly innocuous, but can have profound
effects on the parties to a contract. It provides that the agreement is the entire
understanding and agreement of the parties regarding the subject matter and
supersedes any prior oral or written agreements, representations, understandings, or discussions between the parties. It is especially important to pay attention to this clause when a transaction is reflected in a number of different
agreements. Each should be referenced in the integration provision, lest significant understandings between the parties be excluded from the parties’
formal agreement.

Governing law
In most instances, this section will designate the law of the state in which the
parties are located. In rare instances, a different law is specified; this is generally
done to access provisions of a different state’s law that are considered to be
favorable. Any contracting party should inquire about a choice of law that is
different from the state in which he or she resides and practices.

Renegotiating a Contract
Parties to a contract always retain the power to change the terms of their
agreement, as long as both parties agree. The changes can be reflected in
an amendment in which the parties identify the particular portions of the
original agreement that are being changed. Once the changes are listed, the
amendment should explicitly provide that all other terms of the agreement
remain in full force and effect.
In order to avoid having a contract reflected in multiple documents and
having to refer back and forth from one to the other, some contracting parties
prefer to amend and restate their agreements, a practice that essentially incorporates the changes into the agreement itself. In order to avoid confusion, the
amended and restated agreement should specifically recite the original agreement and recite that the parties desire to amend and restate their agreement
in order to incorporate certain changes.
Finally, some parties, rather than amending or amending and restating
their agreement, merely negotiate a brand new agreement to govern their

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relationship from that point forward. In such instances, most parties intend
that their new agreement be considered a “novation”. A novation is an agreement that completely replaces and supersedes the prior agreement. In order
to have a contract be a novation, it must say so. If a new contract does not
explicitly state that the parties intended it to be a novation, confusion can
be created about whether the original contract was ever terminated. This can
become an issue in litigation involving the contract. The parties, of course,
understand that they intended the new contract to replace the old. However,
if the parties can no longer agree and litigate the contract, the original contract
could be deemed to have continuing effect if the replacement contract is not
explicitly stated to be a novation.

A Brief Word about Regulatory Matters
All physicians are generally aware of the Stark Law and the Anti-Kickback
Law, two federal laws intended to reduce fraud in the Medicare and Medicaid
programs. Because these laws can prescribe certain terms in contracts involving
healthcare entities, a brief discussion of them is provided here.
As noted below, the laws operate differently, although they have the same
ultimate goal. Nonetheless, it is important to be aware of the particular reach
of each one when analyzing a contract under them.

Stark Law
The Stark Law provides that a physician may not make a referral to an entity if
the physician (or an immediate family member of the physician) has a financial
relationship with the entity and if the referral is for designated health services
for which payment may be made under Medicare, Medicaid, or other federal
programs.
Note that the Stark Law applies only to physicians. If a physician or a family
member has a financial relationship with an entity, the physician may not refer
a patient for “designated health services” if payment will be made by a federal
program and if no exception applies.
The threshold question in any Stark analysis is whether the referral is
for “designated health services”. These include clinical laboratory services;
physical therapy services; occupational therapy services; radiology services,
including magnetic resonance imaging (MRI), computed tomography (CT),
and ultrasound; radiation therapy services and supplies; durable medical equipment and supplies; parenteral and enteral nutrients, equipment, and supplies;

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prosthetics and orthotics devices and supplies; home health services; outpatient prescription drugs; and inpatient and outpatient hospital services. Note
that physician services and ambulatory surgery services are not designated
health services under the Stark Law. Inpatient and outpatient hospital services
are included, but services rendered in settings other than a hospital (or an
outpatient department of a hospital) are not covered.
If the contract concerns a designated health service, then the next step in
the analysis is to determine whether the physician has a financial relationship
with the referral entity. For purposes of the Stark Law, the financial relationship can be an ownership interest or a compensation arrangement relating
either to the physician or to a member of the physician’s immediate family.
Remuneration includes not only direct payment of compensation, but also
forgiveness of obligations or the provision of items, devices, or supplies that
the physician would otherwise be required to purchase. Investment interest
can include debt as well as equity.
If the referral is for designated health services and if the physician or an
immediate family member has a financial relationship and if the patient is a
Medicare, Medicaid, or other federal program patient, it is necessary for the
contract at issue to fall within a Stark Law exception. This most often comes
up in connection with rental of office space, rental of equipment, employment, and personal services arrangements (such as medical directorships, for
example). In all of these instances, in order to take advantage of the exception
under the Stark Law, the contract must be in writing, signed by the parties
and specifying the services, equipment, or space covered by the arrangement;
there must be an actual need for the space, equipment, or services; the term
must be for at least one year; the financial terms must be set in advance, be
consistent with fair market value, and be determined in a manner that does
not take into account the volume or value of any referrals or any business generated between the parties; and the terms must be commercially reasonable
even if no referrals are made.
Under the Stark Law, an arrangement must satisfy each element of the
applicable exception; otherwise, the Stark Law is violated. It is not required
that any party intended to violate the Stark Law, merely that the elements of
a Stark violation are present and no exception is satisfied.

The Anti-Kickback Law
The Anti-Kickback Law also applies only in the case of Medicare, Medicaid,
or other federal programs. However, it is significantly broader than the Stark

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Law in that it applies not only to physicians, but to any party in the healthcare
industry. The Anti-Kickback Law is a criminal statute which prohibits any
person from knowingly and willfully soliciting or receiving any remuneration
(including any kickback, bribe, or rebate) directly or indirectly, overtly or
covertly, in cash or in kind, in return for referring an individual to a person for
the furnishing of any item or service for which payment may be made in whole
or in part under a federal healthcare program. Thus, the Anti-Kickback Law
is not limited to a list of designated health services. It applies to any item or
service for which payment may be made under a federal healthcare program.
Because the Anti-Kickback Law is stated so broadly, it requires scrutiny
of every arrangement between persons in the healthcare industry, assuming
they do any Medicare or Medicaid business. In any commercial arrangement, if
there is a difference between fair market value and the amount paid or received,
that difference can arguably be characterized as a payment for referrals.
Because the Anti-Kickback Law is so broad, the government has developed
a number of “safe harbors” which tend to indicate that the parties to a transaction are not paying or receiving a kickback. Like the Stark Law, there are
safe harbors for space rental, equipment rental, personal services and management contracts, employment, and numerous other arrangements. Similarly to
the Stark Law, the safe harbors most applicable to medical practice contracts
require that the contract be in writing and signed by the parties; the contract
clearly identifies the services to which it relates and that such services be all
of the services provided between the parties; the term be for not less than
one year; the aggregate compensation be set in advance, be consistent with
fair market value, and not be determined in a manner that takes into account
the volume or value of referrals; and the aggregate services contracted for not
exceed those which are reasonably necessary to accomplish the commercially
reasonable business purposes of the parties.
Unlike the Stark Law, which is violated regardless of the parties’ intent if
any element of an exception is not met, the Anti-Kickback Law is a criminal
statute and requires intent to violate it. Furthermore, failure to satisfy every
element of an anti-kickback safe harbor does not indicate that the statute
has been violated. The statute is not actually violated unless the party pays
or receives payment for referrals of federal program business. However, it is
wise to satisfy the terms of the applicable safe harbor, if possible, and most
healthcare-related contracts are drafted in order to accomplish this goal.

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The Wheel of Misfortune:
Avoiding Medical Liability
in Elective Surgery
Mark Gorney, MD, FACS

General Considerations

A

plastic and reconstructive surgeon practicing in the United States in the
last 40 years will find it virtually impossible to end his or her career
unblemished by a claim of malpractice. Whoever does so is certainly the rare
exception. This chapter, however, is not the place to review the pathogenesis
of the single most overriding socioeconomic issue of the medical profession in
our time. What is called for are some clear, cogent, and immediately applicable
guidelines which, if followed, should certainly reduce the probability of your
involvement.
As anyone reviewing significant numbers of plastic surgical claims can testify, well over half of the claims are preventable. Most are not based on technical faults, but rather on failures of communication and patient selection
criteria. Patient selection is the ultimate inexact science. It is a mélange of
surgical judgment, gut feelings, personality interactions, the surgeon’s ego
strength, and, regrettably, economic considerations. Communication, on the
other hand, is the sine qua non of building a doctor-patient relationship.
Unfortunately, the ability to communicate well is a personality characteristic that cannot be readily learned in adulthood. Regardless of how brilliant
the mind is or how deft the hands are, someone who appears to be cold, arrogant, or insensitive is far more likely to be sued than one who relates to people
at a “human” level.
The common denominator of all malpractice claims is a breakdown in
communications (rapport). It is highly unlikely that you will commit no errors
in your career. It is, however, entirely possible to alter the subsequent outcome
of an error by adhering to a few simple rules.
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Standard of Care
Malpractice is defined in legal lexicon as “treatment which is contrary to
accepted medical standards and which produces injurious results in the
patient.” Although most medical malpractice actions are based on laws governing negligence, the law recognizes that medicine is an inexact art and that
there cannot be absolute liability. Thus, the cause of action is usually the “failure of defendant/physician to exercise that reasonable degree of skill, learning,
care, and treatment ordinarily possessed by others of the same profession in the
community”. In the past, the term community was accepted geographically,
but this is no longer true. Now, on the supposition that all doctors keep up
with the latest developments in their field, community is generally interpreted
as the “specialty community”. The standards are now those of the specialty,
without regard to geographic location. This is usually referred to as standard
of care.
Standard of care has special implications in plastic surgery, a specialty that
encompasses many variations to achieve the same end. Thus, to a certain
extent, the plastic surgeon has more latitude than do other surgeons.

Warranty
The law holds that, by merely engaging to render treatment, a doctor warrants
that he or she has the learning skill of the average member of his or her
specialty and that he or she will apply that learning and skill with ordinary
and reasonable care. This warranty of due care is legally implied; it need not
be mentioned by the physician or the patient. However, the warranty is for
service, not for cure. Thus, the doctor does not imply that the operation will
be a success, that results will be favorable, or that he or she will not commit
medical errors which are due to a lack of skill and care.
One of the by products of technology and the crunch of competition
is the increasing popularity of imaging devices. Although useful in planning
craniofacial operations, these devices are now often used as inducements to
aesthetic surgery. If a surgeon cannot deliver what was created on a computer
screen, he or she may face a breach of warranty action. To a lesser extent, the
same is true of showing pictures of only great results or enthusiastic testimonial
statements of former patients. I strongly advise the use of a carefully worded
disclaimer, written by legal counsel, for anyone who wishes to use an imaging
device in patient consultation. If patient photographs are used, they should
represent both excellent and only fair results to avoid an implied warranty.

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Informed Consent
For centuries, Anglo-Saxon common law has respected the individual’s right
to the integrity of his or her person; any unauthorized harmful or offensive
touching has technically constituted battery. Thus, a physician who treats a
person without that person’s consent is usually guilty of battery.
How does informed consent differ from routine consent? In the former,
the patient has sufficient understanding of the nature, purpose, and risks of
the procedure to make an intelligent decision to accept or reject the procedure. Obviously, in discussing the risks, a certain amount of discretion must
be employed. Is this consistent with “full disclosure” of the facts necessary
for informed consent? The emphasis is the word informed. While attempting
to define the yardstick of disclosure, the courts divide medical and surgical
procedures into two categories:
1. Common procedures, which incur minor or very remote serious risks
(including death or serious bodily harm), e.g., the administration of antibiotics; and
2. Procedures involving serious risks, for which the doctor has an “affirmative
duty to disclose the potential of death or serious harm and explain, in
lengthy terms, the complications that might possibly occur.”
Affirmative duty means that the physician is obliged to disclose, on his or
her own, without waiting for the patient to ask. It is the patient, not the physician, who has the prerogative of determining his or her best interests. Thus,
the physician is obliged to discuss with the patient the therapeutic alternatives
and their particular hazards.
The question of how much to explain, and in what detail, is dictated by
a balance between the surgeon’s feelings about his or her patient and the
requirements of the law. You need not, in the words of a justice of the U.S.
Supreme Court, “engage in an orgy or open-minded disclosure.” It is simply
not possible to tell all patients everything that can happen without scaring
them out of their surgery. Rather, as the law states, the patient must be told
the most probable of the known dangers and the percentage of that probability.
The rest may be disclosed in general terms while reminding the patient that
he or she also has a statistical probability of falling down and hurting himself
or herself that very same day.
Obviously, the most common complications should be volunteered frankly
and openly, and their probability — based on your personal experience —
should also be mentioned.

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In summary, although it may seem the ultimate platitude, the best way
to stay out of trouble is to be honest, warm, and compassionate. If you use
common sense and behave toward the patient as you would want another
physician to behave toward your spouse, it is highly unlikely that you will
have need for this information.
Unfortunately, in the current state of the art, any or all of this information
is wasted unless you document it. There is an 11th commandment: write it
down!

Patient Selection
The growing popularity of aesthetic plastic surgery has, unfortunately, created
a carnival-like atmosphere in which advertising by unqualified practitioners is
only one aspect. In this climate, it becomes imperative to establish clear criteria
for patient selection; without these, there will be an inevitable parallel increase
in patient dissatisfaction and litigation.
Who, then, is the ideal candidate for aesthetic surgery? There is no such
thing, but the surgeon should note any personality factors that will enhance the
physical improvements sought. A person who is obviously intelligent (preferably educated) who listens (not merely hears), and who clearly understands
the pros and cons of what he or she seeks is a good candidate. A person who
has a clearly discernible physical problem about which he or she has an understandable, but not neurotic, concern is a good candidate. A person whose job
requires him or her to look alert and well or who must compete with younger
people is probably a good candidate as well. All of these attributes are generally true with the exception of immature, overexpectant, narcissistic patients,
who should be evaluated with the utmost care. Generally speaking, men make
more difficult patients than women. They do not tolerate pain as well and are
generally more fussy.
There are basically two categories for rejection. First is anatomic unsuitability. Second is emotional inadequacy. Since the latter is by far the more important, the inexperienced surgeon must learn to differentiate between healthy
and unhealthy reasons for a patient’s desire for improvement. In the case of
male patients, it becomes absolutely critical to develop a sixth sense regarding motivation. The vast majority of poor results in males are on the basis of
emotional dissatisfaction rather than technical failure.
Motivation rather than specific psychodynamics should be the plastic surgeon’s overriding concern. Is it a pragmatic desire to improve one’s appearance

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or rather a pathologic focus of channeling subconscious problems on a physical
fault?
Strength of motivation is critical. It has a startlingly close relation with
patient satisfaction. Furthermore, the strongly motivated patient will have
less pain, a better postoperative course, and a significantly higher index of
satisfaction regardless of the result.

Great expectations
Increasing experience invariably teaches the plastic surgeon to avoid patients
who expect surgery to change their lives. The surgeon who operates on someone with a large, crooked nose and large hang-ups is likely to produce a smaller,
straighter nose and larger hang-ups, or worse. Plastic surgery, regardless of its
excellence, is dubious therapy for severe personality disturbances.

The demanding patient
As a general rule, the patient who brings pictures, drawings, and exact specifications of what he or she wants should be viewed with suspicion. Such a person
has little insight into the realities of plastic surgery and, by definition, often
forces the surgeon to try to satisfy demands that are too restricting. More
than likely, this type of patient is very explicit, very fussy, and very demanding
about tiny imperfections. He or she cannot understand that the surgeon is
working with human tissue, not clay.

The indecisive patient
To the question, “Doctor, do you think I ought to have this done?” the perceptive surgeon responds, “This is a decision I cannot make for you. I cannot
encourage or discourage the operation. I can only tell you what I think we
can accomplish. If you have any doubts, I strongly recommend that you think
about it further or not have it done at all.” It is very difficult to dissuade a
jury or an arbitration panel when one of the patient’s claims is that he or she
was “talked into” the surgery.

The immature patient
For reasons other than growth and development, you should evaluate the
degree of maturity of a young applicant. There is, of course, no linear relationship between maturity and growth. However, immature patients often

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have excessively romantic and unrealistic expectations from their surgery.
Postoperatively, when confronted with a mirror, they sometimes exhibit disconcerting shock reactions and alarming behavior. If they have been talked
into the surgery by a relative or a friend, the problem is compounded.

The “important” patient
Beware of patients who make a conscious effort to impress everyone with their
stature, their profession, their standing in the community, their peer groups,
and the like. Such individuals often suggest that their successful result will
immediately bring on a flood of referrals and undying fame. They often turn
out to be very difficult patients with a weak ego structure that needs constant
shoring up. They are difficult to satisfy and are prone to forget their financial
obligations.

The secretive patient
Some patients make a fetish of absolute secrecy about their surgery. Besides
the fact that such an arrangement is difficult to guarantee, exaggerated concern over the secrecy of the operation often indicates a suspicious degree of
guilt.

Familial disapproval
It is preferable to have the immediate family in agreement with the proposed
operation. Too often, failure of communication or an unsatisfactory result
produces an automatic, “See, I told you so” reaction, which only deepens
the guilt, the dissatisfaction, and the associated headaches. When the family
disapproves, another red flag is raised.

Failure to establish rapport
The experienced aesthetic surgeon can usually determine within minutes after
entering the room whether the individual sitting there will become his or her
patient. Early in the conversation, there may be discernible “bad vibes”. To
take on as a patient a person whom you truly dislike is a fatal mistake. A clash
of personalities cancels out all other factors, regardless of how challenging the
case is.

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The “surgiholic”
Beware of the patient who has had multiple or repeated aesthetic procedures.
Such a patient obviously has a severely, and probably incorrigibly, distorted
body image. Aside from the technical difficulties involved, you will suffer from
comparison with the other surgeons. If you are more successful, you may wind
up like Sir Harold Gillies’ favorite image of the patient running along beside
your coffin pleading, “One more, please.”

An Ounce of Prevention
There should be a frank discussion of fees and costs, if not by you, then by
someone on your staff. Experience has shown that payment in full (and in
advance) for cosmetic surgery diminishes subsequent unhappiness with final
results.
It is axiomatic that all patients undergoing surgery with local anesthesia
be adequately sedated. No operative permit should be signed after sedation is
administered, since it may be held invalid. Every member of the surgical team
should understand clearly that the patient, under the influence of narcotics,
may misinterpret the most innocent words or jokes. Under no circumstances
should there be arguments of any kind. There should be no swearing for any
reason. Assistants and/or observers should be warned to save questions and
comments for later. Finally, there is no such word as “oops” in the operating
room; whether the surgeon drops a hemostat or comminutes the nasal bones,
the word simply does not exist. It helps to talk to the patient and to be highly
visible at the beginning and end of the procedure. Also, if the surgery is being
performed with local anesthesia, it is extremely therapeutic to have music
in the operating room. Music not only defuses the unfamiliar and terrifying
atmosphere, but also covers up the sounds of the operating room (which in
themselves may be quite anxiety-producing).
At the end of the operation, the surgeon should immediately report to
the family. If no family members are present, a telephone call may be a very
inexpensive investment. A visit to the patient on the evening of the operation
is immensely reassuring. The surgeon should be the last person the patient
sees before the anesthetic takes effect and the first one on whom he or she
focuses in the recovery room. Discharge instructions should be clear, specific,
and in writing. Availability during the first few days is essential. If the surgeon

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signs out, it should be to someone equally competent, and the patient should
be apprised in advance.
When dressings come off, there are innumerable questions, all of which
require simple, reassuring answers. These questions will be fewer and less
anxious if they have been answered preoperatively.
All litigation in plastic surgery has as a common denominator poor communication. Underlying all dissatisfaction is a breakdown in the rapport between
patient and surgeon. This vital relationship is often shattered by the surgeon’s
arrogance, hostility, and coldness (real or imagined), and mostly by the fact
that “he or she didn’t care”. There are only two ways to avoid such a debacle:
(1) make sure the patient has no reason to feel that way, and (2) avoid the
patient who is going to feel that way no matter what is done.

Effective Communication as a
Claims-Prevention Technique
Although the doctor’s skill, reputation, and other intangible factors contribute
to a patient’s sense of confidence, a substantial part of what is called “rapport”
between patient and doctor is based on forthright and accurate communication. It is faulty communication which most often leads to the inevitable
vicious cycle which follows: disappointment, anger or frustration on the part
of the patient, reactive hostility, defensiveness and arrogance from the doctor,
deepening patient anger, and finally a visit to the attorney.
The art of listening, as well as that of expression, both verbal and nonverbal,
merits serious attention in your efforts to reduce malpractice lawsuits.

Listening
Obviously, hearing and listening are extremely dissimilar processes. Unlike
hearing, which is the perception of physical stimuli to our ears, listening is the
active cognitive process of interpreting what is heard, evaluating that information, and deciding how that information may be used. It is a fact that people
like those persons who demonstrate their interest by listening and talking
with them. It is also a fact that people are reluctant to sue someone they like.
Therefore, learning to listen can be a powerful claims-prevention tool.
Accurate communication is a two-way process. It is a give-and-take situation. Many psychiatrists and psychologists define listening as “giving”
of oneself, while talking is defined as “taking” from others. On average,

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70 to 80 percent of our total waking day is spent in some form of communication, and 45 percent of that is listening. These percentages translate into an
average of six hours of listening daily.
In the practice of medicine, this figure may be a conservative estimate.
Of the four basic communication skills — listening, speaking, reading, and
writing — the last three get the most attention in our educational efforts.
The most used skill is the one least formally taught. The generally mistaken
assumption is made that if you can hear, you can (and will) listen. Not so!
Efficient listening requires conscious effort.

Not allowing distractions
The surgeon’s office environment permits interruptions that make effective
listening difficult. If possible, distractions that steal attention should not be
allowed when communicating with a patient.

Listening not only for details or facts
Medical training and examinations are geared toward facts and figures.
Consequently, there is often a failure to take into account the equally important emotions, behavior, and intentions of the patient.

Reflective feedback
This technique indicates to the speaker whether his or her message is being
understood. This is accomplished by asking questions, making statements,
or offering visual cues that indicate whether you understand, agree, do not
understand, or disagree with the message. It is withheld until you confidently
understand what the patient is trying to communicate. Use of this technique
also makes it clear to the speaker that you are listening carefully.

Listening with your eyes
It is reported that 80 percent of all communication of emotion from one
person to another is nonverbal. You can stay attuned to what the speaker
is saying through his or her body positioning, eye movement and contact,
physical contact, and other body language. It helps to “listen” with your eye.
Two books written by Desmond Morris, Manwatching and Bodywatching, are
excellent references on the subject.

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Communication
Tailoring your language
One of the most common complaints in patient attitude surveys has to do
with physicians’ use of complex terminology or medical jargon. There is a
substantial choice of words available to communicate with the patient, depending on his or her level of intelligence and educational level. You may even have
to resort to basic description using Anglo-Saxon terminology. Just make sure
you are understood.
It is best to choose words that do not produce anxiety. While “excise”
might be misunderstood, “cutting it out” sounds painful. “Removing it” is a
better way to convey the message without inducing stress.

Repetition
Various studies have shown that the average patient retains 35 percent of what
he or she has been told. Thus, it does no harm to repeat, in summary form, the
essential points of your message at the end of the consultation or examination.
It will strongly reinforce what you have said.

Requesting written questions
The anxiety of a visit to the doctor often causes patients to forget important
questions or information until they have left your office. The French call
this esprit d’escalier, or “spirit of the staircase”, which is where many people
remember what they forgot to ask. Encourage patients to write down whatever
questions occur to them and to bring their lists with them on their next visit.
If they already have a list, do not — by word or body language — express
impatience. In the event of an unfavorable outcome, the conversation about
that list may prove extremely useful in your defense.
Physicians should not permit their own emotions or frustrations to reflect
on the patient. The anxieties of preoperative and postoperative patients often
act as a lens that greatly magnifies the physician’s body language. A frown or a
simple “Hmmm” may exacerbate that anxiety. A sigh, raised eyebrow, or look
of skepticism when evaluating a colleague’s results is enough to trigger a visit
to the plaintiff’s attorney’s office.
Positive rapport, on the other hand, can weather all sorts of treatment failures and complications. The art of effective listening and speaking is rewarded by friendship, understanding, and good rapport. In the

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doctor-patient relationship, this interaction assumes critical importance, since
the treatment outcome may literally depend on it.

Anger: A Root Cause of Malpractice Claims
As plastic surgeons, we tend to forget that medical litigation is inevitably a
distillate of a simmering cauldron of emotional, psychological, and even psychiatric ingredients. All malpractice claims have anger as one of their root
causes. It may be on the part of the patient, the doctor, or both, but anger is
always present. If we understand and learn to control this emotional aspect of
medical misadventures, we can dramatically modify the outcome of an unfavorable result.
Virtually every patient contemplating medical treatment experiences variable degrees of anxiety. They seek reassurance from the surgeon against their
uncertainties. An unfavorable outcome evokes feelings of despair and helplessness that may quickly turn into hostility. Regardless of the true cause of
the result, such hostility will be focused on the most convenient and visible
target — the doctor.
An unfavorable outcome also produces anxiety for the physician. More
often than not, patient complaints are interpreted as personal affronts that
strike at the doctor’s sense of professionalism, pride, and competence.
When the complaint is perceived by the doctor as being unwarranted,
this complex human interaction may quickly degenerate into mutual hostility.
A vicious cycle is then established: the physician’s anxiety, guilt, hostility, and
arrogance are countered by hostility of the patient, and the physician’s hostility mounts. In this climate, the possibility of a lawsuit quickly becomes a
probability.
It is very difficult, if not impossible, to be objective when one is a party
to an incipient lawsuit. Nonetheless, if it were possible to change the course
of events prior to the onset of mutual hostility, the vast majority of malpractice actions could be avoided. The pretreatment or preoperative consultation,
during which informed consent is obtained, can become a unique occasion for
the doctor-patient relationship to be firmly established through the sharing of
uncertainty.

The normal psychodynamics of patients’ anger
It is entirely appropriate for patients to feel a sense of bewilderment and anxiety, especially when elective surgery does not go smoothly. The borderline

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between anxiety and anger is very tenuous, and the conversion factor is uncertainty — the fear of the unknown.
How do we cope with uncertainty? Blaming someone else places the
responsibility elsewhere and gives one a sense of “control”, which, however
inappropriate, is easier to cope with psychologically. A patient frightened by a
postoperative complication, uncertain about the future, may gain a distorted
sense of security by blaming the physician. The natural consequence of this
distortion, then, is: “If it is the doctor’s fault, the responsibility is the doctor’s
to correct.”
The patient’s distorted perceptions may clash head-on with the physician’s
understandable anxieties and wounded pride. The patient blames the physician, who in turn becomes defensive. It is at this critically delicate juncture
that the physician’s reaction can set in motion, or prevent, a natural chain of
reaction.
The physician must make a supreme effort to put aside feelings of disappointment, anxiety, defensiveness, and hostility that are natural to all of us
when we are attacked. The physician must understand that he or she is probably dealing with a frightened patient who is using anger to gain “control” of
the situation. The entire mood and subsequent developments can be changed
by whatever understanding, support, and encouragement seem appropriate to
the situation.
One of the worst errors in dealing with angry or dissatisfied patients is to
try to avoid them. Although this is an understandable reaction, it is easily the
surest way to hasten the arrival of a summons and complaint. As difficult and
stressful as it may be, the more you talk and listen to that patient, the more
likely you are to avoid converting an incident into a claim. If you assume
that at least 50 percent of the effort necessary for effective communication is
your responsibility, you will successfully defuse the ticking time bomb. It is
necessary to actively participate in the process rather than follow your natural
instincts and run away or hide.

General Guidelines
1. The consequences of illegible handwriting can be costly. Be certain that
your entries in all medical records are clear and readable. If possible, dictate,
type, or enter into the patient’s computer file all long entries that require
more than brief or routine annotations.
2. Never squeeze words into a line or leave blank spaces of any sort. Draw
diagonal lines through all blank spaces after an entry.

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3. Never erase, overwrite, or try to ink out any entry. In case of error, draw a
line across it and write “error” with the date, time, and your initials in the
margin.
4. Never ever add anything at any time unless it is in a separately dated and
signed note. Remember that the entry date or ink type can be accurately
determined retrospectively. Also be aware that the plaintiff’s attorney may
have a copy of the patient’s original records, and any alteration after the
fact will seriously compromise the defense of your case.
5. The date and time of each entry may be critical. Be sure that each page is
dated and bears the patient’s name, and that each progress note is accompanied by the date and time.
6. Avoid personal abbreviations, ditto marks, or initials. Use only standard
and accepted medical abbreviations.
7. Retain your records for a minimum of seven years from the date of the last
entry.

Common Errors of Commission
and Omission
It is imperative that you always:
1. Document when you are absent, with the name of the physician you have
signed out to, along with the date and time.
2. Record pertinent observations and follow-up in any abnormal situation.
3. Ensure documentation of laboratory and radiologic examination results
with a system which requires that all such reports will be seen, evaluated,
and initialed by you or a colleague prior to filling in the patient’s chart.
This is particularly important when dealing with laboratory or pathology
reports, X-rays relating to fractures, or computed tomography (CT) scans.
4. Justify your failure to comply with, or rejection of, a consultant’s advice.
5. Document in detail your viewpoints and reasons for disagreement on
patient care between you and a hospital utilization review committee or
preferred provider organization (PPO).
6. Explain any delayed responses to nurse or house staff calls; enter the dates
and times.
7. Respond to nurses’ pertinent observations of the patient and record the
follow-up in your progress notes.

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8. Document the patient’s verbatim statements:
Wrong: “Patient apparently fell.”
Correct: “Patient states: ‘Tried to get up, tripped and hit head on the
corner of the bed.’ ”
9. Record negative reaction to any treatment or medication.
Remember, to always use objective, accurate, and specific language.

The Patient’s Records
The following entries should appear in the office and/or hospital records of
each patient:
1. History and physical, specifically noticing absence of abnormality.
2. Past history, with particular emphasis on current medications, allergies,
drug sensitivities, or previous surgery.
3. Specific notation on the patient’s experience, if any, with smoking, drug
or alcohol abuse, or previous surgeries.
4. Progress notes, entered after each office visit, on any change in status.
If negative, your follow-up should be indicated.
5. Signed and witnessed consent forms for special procedures or surgery.
6. Medications, treatments, and specimens (where sent).
7. Patient’s response to medications or procedures.
8. Documentation of the patient’s failure to follow advice, refusal to cooperate, or failure to keep appointments. Missed appointments should be
logged. Record your follow-up telephone calls and letters.
9. All significant laboratory, pathology, and X-ray reports, and the dates
when ordered and read.
10. Copies or records of instructions of any kind (including diet) and directions to the family.
11. Consultations with other physicians and their written (or oral) responses,
with the date and time recorded.
12. Thorough documentation of any patient’s grievance, including the date
and time.
13. Preoperative and postoperative photographs. The critical importance of
these cannot be overemphasized. They should be of the same pose, lighting conditions, and quality. In plastic surgical claims, these photographs

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can literally spell the difference between an attorney’s refusal to take the
case and a substantial plaintiff’s verdict.

Instructions to Patients and Personnel
1. Always record your instructions in writing. Keep a copy in the patient’s
record.
2. Review your instructions with the patient and family.
3. Ensure comprehension. Ask and record if there are any questions after
instructions.
4. Include in your instructions (when applicable):
a.
b.
c.
d.
e.

Specific wound care.
Limitations of activity, position, or exercise.
Dietary restrictions.
Specific instructions on medications, including possible side effects.
Follow-up appointments.

5. Document:
a. Language limitations, attempts made to overcome them by translators,
and your notation if comprehension appears to be questionable.
b. Any literature provided to the patient and family, and/or video orientations.
c. Copy of instructions given.
d. Patient’s failure to comply with instructions, and that the patient was
informed of risks of noncompliance.
6. Record patient noncompliance. A situation that requires special procedures and attention relates to a patient’s noncompliance or outright
refusal to follow the doctor’s orders or recommendations. This problem
may be more apparent to your staff than to you.
The staff should record missed appointments in the chart and call them
to your attention. If the patient’s noncompliance carries the potential for
possible injury, a certified return-receipt letter expressing appropriate concerns for the patient’s welfare and (when indicated) warnings regarding
the consequences should be sent.
7. Set up suspense files for all tests, procedures, and consultations. If the
tests are not carried out, the staff should call this to your attention, and
the patient should be reminded. Patient noncompliance and all callbacks

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to the patient should be recorded in the chart. Copies of all letters to the
patient should be included.
In case of continued noncompliance, and if circumstances warrant, a
certified return-receipt letter should also indicate the withdrawal of your
care. Notations of all actions and copies of all letters sent to the patient
should become a permanent part of the patient’s record.
8. Use cautions and labels. Identify any drug allergies, and instruct the staff
to display them prominently on a color-coded label placed in a specific
location on the outside of the patient’s chart. Specials labels should also
be used for identifying smokers and if the case is a medicolegal or compensation case.
9. Establish telephone routines with insurance companies and attorneys.
The staff should not discuss the patient’s medical problems or records
without a release signed by the patient (or legal guardian) and the approval
of the appropriate person in your office. The date, time, and name of
the person calling and the purpose of the call should be recorded in
the patient’s chart. When requesting authorization from an insurance
company to perform a treatment, tests, or other procedures, the staff
must make sure that the patient has given a general release as a member
of a plan. They should record the date, time, and name of the person
authorizing the treatment, test, or procedure.
10. Enhance communication with patients in the office. Encourage your staff
to initiate personal contact with patients by expressing warmth and individual attention. Impress on the staff that they may represent the first,
last, and most durable impression that patients have of your office and
therefore of you. The staff can make the impression a favorable one by
their demeanor. When patients comment on your staff unfavorably, you
should investigate; when the comment is favorable, be sure to convey that.

Conclusion
It is simply not possible to summarize three decades of experience into a
chapter, or even into a whole book for that matter. It is also unrealistic to
say, “This is what I do; if you follow my advice, you too can stay troublefree.” Unfortunately, it is not that simple. I have, therefore, tried to limit
myself to principles and specific recommendations applicable to everyone.
In the last analysis, though, even strict adherence to my prescriptions is
no guarantee of a cure, since I am dealing with intangible elements such

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as personality characteristics, ego structure, social conscience, and strong
economic incentives.
It is not likely that in the coming decades there will be any major changes
in our legal system. For this to happen, American jurisprudence would have to
undergo revolutionary changes, and public morality a renaissance. Therefore,
the next generation of plastic surgeons is plainly going to have to learn to live
with the existing system of adjudicating medical injury. We have to develop
the ability to change the things that we can, the serenity to accept those things
which cannot be changed, and the wisdom to know the difference.

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Use of the Internet by Patients:
How It Affects Your Practice
and What to Do About It
Ronald P. Gruber, MD

T

he Internet is a place where some patients have chosen to defame their
physician and vent their frustrations. Many, if not all, of their allegations may be false. However, the physician is virtually defenseless to counter
allegations made by the patient on the web. Health Insurance Portability
and Accountability Act (HIPAA) regulations prevent the doctor from revealing factual details about the patient. More importantly, general rebuttal only
encourages further ranting by the patient and other Internet users, thereby
expanding (not contracting) the problem. The net result is that many physicians’ reputations have been damaged, their practices have fallen off, and they
have been emotionally abused.
Legal redress has been a lengthy, energy-consuming, expensive, and often
unsuccessful endeavor. In this chapter, options to remedy the situation are
reviewed. The physician is encouraged to (1) proceed slowly and cautiously
and in general not respond publicly, (2) consider communicating with the
patient (either in person or through a surrogate) to discuss the problem and
its solution rationally, and (3) consider resorting to legal action only when
the rant is so outrageous that it is overtly damaging to your practice and your
reputation.
The best solution to the Internet problem is prevention. A pre-op agreement with the patient is the single most successful method to encourage
patients to deal with their frustrations in a non-ranting, more constructive
manner. Also, working with the system by encouraging patients to write positive reviews is beneficial. Finally, the doctor has to maintain the best possible

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relationship with his/her patients, recognizing how easy it is for anyone of
them to inflict severe harm.

The Problem
Doctors are being defamed by disgruntled patients on the Internet. Patients
may have chosen this approach because it is easier and less energy-consuming
than a malpractice lawsuit, or because they know that their legal recourse
against the doctor is meritless or not likely to be successful. Patients create
their own websites (blogs) to relate their experience with the doctor, or simply
post a review on a reviewing or rating site. Damage to the physician can be
extensive and far exceed any malpractice lawsuit. Some doctors who have
been hit hard by a negative blog have reported a sudden drop in business
and revenue by as much as 20–30 percent almost overnight. The fictitious
examples given below are very similar to actual cases, but far enough removed
so that both the doctor and the patient cannot be identified.

Example 1
A middle-aged male patient who had a history of one prior facelift developed
skin necrosis of the left side of his face soon after the facelift. The area of
involvement was 6 cm by 3 cm, and it was full thickness. The patient sought
the help of another doctor who felt it was necessary to graft the area. Shortly
after the graft was placed on his face, the patient created a blog and posted
pictures of the wound before and immediately after the skin graft. He also
demanded $250,000 from the first doctor, or he would wage an expanded
public campaign against the doctor including any television shows he could
get on. The doctor, who had an exemplary reputation in his own community, felt that there was nothing else he could have done to prevent the
problem. The patient was a smoker and there were some questions as to
whether or not he smoked. The doctor was so devastated by the personal
attack and the extortion attempts that he hired an attorney. He was able to
get a HIPAA release, and he posted his own blog including a video describing “the other side of the story”. In the end, the patient was not able to
wage a successful campaign and the story died down. However, the time,
energy, and money spent by the doctor were something he was not sure was
worth it.

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Example 2
A patient who underwent an augmentation mammoplasty developed a postop cellulitis marked by moderate swelling and erythema. At the peak of her
complication, the patient created a blog. She referred to the operation as
a surgical nightmare and posted pictures of her enlarged inflamed breast.
The text of the site was so damaging that the doctor himself received 15
hate emails. One of them said, “Is this the office that botched the surgery?
I was considering your office but not after seeing the wretched pictures. I
am sending this website link to everyone I know.” The doctor noticed a
precipitous drop in new patients. The cellulitis promptly resolved, and at
one year post-op the breasts were soft and normal. There was no capsular
contracture or any stigmata. The result was beautiful. However, the doctor
was not permitted to show it on the Internet. The blog containing pictures
of the cellulitic breast remains to this day.

Who we are really dealing with on the web
There are about 40+ sites that review and/or rate doctors. Most prominent
of the group is Yelp.com (www.yelp.com). But others include:





Angie’s List (www.angieslist.com);
AwfulPlasticSurgery.com (www.awfulplasticsurgery.com);
SurgerySagas.com (www.surgerysagas.com);
RateMDs.com (www.ratemds.com).

Sites against single doctors include MySurgeryNightmare.com (www.
mysurgerynightmare.com). Third-party sites addressing all doctors include:









RateMDs.com (www.ratemds.com);
Vitals.com (www.vitals.com);
DrScore.com (www.drscore.com);
DoctorScorecard.com (www.doctorscorecard.com);
HealthGrades.com (www.healthgrades.com);
Vimo.com (www.vimo.com);
RevolutionHealth.com (www.revolutionhealth.com); and
MDJunction.com (www.mdjunction.com.).

Health insurance carrier “Zagat” sites include Blue Cross and Blue Shield
of Minnesota (www.bluecrossshield.com).

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One thing to note about all these sites is that no one site is perceived as a
go-to credible site.

Why it is a problem
• Reviews that appear on the Internet are anecdotal. Doctors see hundreds
to thousands of patients every year. One review (positive or negative) is not
an accurate reflection of the physician’s competence. Most sites have only
one to three posts. Thus, the review can be defined by extremes.
• Anonymous posts typically convey false information. Not all posts are from
patients. Some are from a disgruntled employee, an ex-spouse, or competitors. Anonymity reduces civility and increases bravery.
• Serious attackers (often patients) may try to acquire a domain name with
your name in it. Therefore, it is more likely to come up on Google or Yahoo
when the doctor’s name is made the search word.
• Doctors cannot respond with medical facts because of HIPAA regulations.
• A plumber does all the work. In surgical situations, however, patients participate by compliance in taking their medications correctly and in following
their post-op instructions. They are therefore likely to be partly responsible
for their own negative review.
• Reviews often tell half a story, not the full story. A patient might write on a
blog, “Two days after my surgery my wound opened.” The full story might
be, “Two days after my surgery I went back to work digging ditches.” True
outcomes may be revealed over time, sometimes years.
• Medical care is often delivered by a team. Other members of the team, not
the doctor, may be responsible for the patient’s complaint.
• Complications are unavoidable; therefore, negative reviews are unavoidable.
Complications are particularly likely to occur in some patients; for example,
a 450-pound diabetic who smokes is much more likely to have a complication than a marathon runner. The doctor does not have full control over
negative outcomes.
• Unlike non-medical businesses, one negative review in the midst of other
glowing reviews for a doctor is enough to drive patients away. Given a choice
between two doctors, one of whom has no negative reviews and the other
who has one, there is no good reason for a prospective patient to take a
chance with the doctor with the one negative review.
• Responding to a patient’s rant prompts the patient to write another rant
and other viewers on the Internet will also add their own opinions, much

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of them directed negatively toward the doctor. The piling on of negative
opinions on the Internet is referred to as “flaming”.

Reviewing site’s perspective
According to Sonia Survanshi McFarland of Yelp.com, which is currently
one of the best-known review sites, Yelp is merely trying to inform the
public at large and on balance reviews can be beneficial to those running
small businesses, including physicians. Yelp is a reviewing site that deals
largely with non-health businesses, with entries that are 31 percent restaurant
reviews, 23 percent shopping reviews, and 4 percent health-related reviews.
Surprisingly, most reviews are good according to the Yelp representative:
32 percent are given a top five-star rating, and just 7 percent get a low one-star
rating. Yelp considers it a plus to be able to find as much information as possible about a business with which a consumer is potentially going to engage.
Yelp also considers it a plus for the reviewee (the business owner) to be able
to keep track of the number of people looking at the reviews as well as learn
from the types of comments made about their business.
To allay the anxiety of doctors who are worried that negative reviews last
forever, the Yelp representative notes that reviews do disappear over time,
some because the posting individual decides to remove it and some because the
content violates Yelp guidelines. These guidelines relate to egregious breach
of morality and ethics, e.g., overtly prejudicial remarks such as referring to a
doctor as Dr. Mengele from Nazi Germany. In addition, the Yelp site has an
automated filter that removes some reviews.
To encourage a more positive interaction between the rating site and small
businesses, including physicians, a section of the reviewing site is devoted to
paid advertising. In one instance, a patient who saw the doctor only once for
a pre-op visit sent in a review alleging that the doctor was a racist because
the physician would not operate on the patient. The doctor explained that
the patient’s health status, particularly his high blood pressure, high body
weight, and diabetes, precluded safe surgery. Nonetheless, the patient posted
his negative “racist” review. On the grounds that the review was a racial lie,
the plastic surgeon requested Yelp to remove the review, which coincidentally was posted at the top of all his positive reviews. Yelp indicated that the
review did not meet their criteria for removal. However, if the doctor purchased advertising space with Yelp for approximately US$350 per month,
they would be able to allow the doctor to put one of his favorable reviews
at the top of the list of reviews to overshadow the negative comment. It is

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also not possible to ask patients to post a review at the time of their office
visit using the office computer, as the rating site is concerned about fictitious
reviews.

The Law and Its Relation to the Physician
John W. Dozier, Jr., Esq. (author of Google Bomb) is a nationally recognized
leader in Internet law (sometimes referred to as cyberlaw), particularly as it
relates to physician problems on the Internet with blogging and complaining
patients. During his career, he has handled 500 trials. Some of his cases have
dealt directly with defamation of surgeons by their patients. He knows what
a physician can and cannot do when unfairly attacked on the Internet; he also
knows what the limitations are and what hurdles have to be overcome if one
chooses to pursue legal action against a ranting patient.

Definitions
Defamation is defined as a publication of a false statement of fact which causes
damage. Libel refers to the written word, and slander refers to the spoken
word. Damage is usually implied when the statement alleges criminal misconduct or professional incompetence. Defamation is particularly dangerous
on the web since research on a plastic surgeon will be extensive. Also, one
negative post will offset any number of positive posts and has a tendency to
generate “followers”.

The legal hurdle
The law makes it difficult for the doctor to seek legal redress against the patient.
Previously, it was possible to deal with outrageous public attacks of defamation
with a strategic lawsuit against public participation (SLAPP). It was intended
to intimidate and silence critics by burdening them with the cost of a legal
defense until they abandoned their criticism or opposition. However, an antiSLAPP law was passed which strongly protects public participation despite
defamation.
The statute operates to place onerous burdens on the plaintiff (the doctor, in this case) without any corresponding burdens on the defendant (the
patient). The plaintiff is required to lay bare his/her proof at a preliminary
stage of the litigation or else risk not only a dismissal of his/her claim, but

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assignment of responsibility for the defendant’s attorney’s fees and costs.
Moreover, because most defamation defendants are often “judgment proof”,
the chance of collecting such an award is dubious at best. This is a very strong
law that discourages legal redress for defamation.

HIPAA regulations
HIPAA rules make it impossible for the physician to counter the patient on
the Internet. They specifically prohibit a health care provider from disclosing
medical information regarding a patient of the provider without authorization. The law authorizes administrative fines (up to US$250,000) against any
person or entity that negligently or willfully discloses medical information of
the patient. “Medical information” means any individually identifiable information in possession of, or derived from, a provider of health care regarding a patient’s medical history, mental or physical condition, or treatment.
“Individually identifiable” means that the medical information contains any
element of personal identifying information sufficient to allow identification
of the patient, including his/her address and telephone number.

Legal recourses
If you as the doctor feel that the rant is so outrageous and damaging that
you need to justify your actions to your colleagues and the public, you may
want to place a responding blog on the web after getting a HIPAA release.
Remember, however, that such legal action can be a long, drawn-out process,
one that is costly and one that expands your exposure manyfold greater than
when it began.
In one case, following a cosmetic surgery procedure, a patient posted
an exceptionally offensive blog. The surgeon, with the aid of his university
employer (University of California, Davis), filed legal action, which promptly
became part of a malpractice action by the patient. The case finally went to
the appellate court before it was settled. The settlement required the patient
to remove the Internet postings, but the doctor (through the malpractice
company) was required to pay the legal fees of the patient. The legal process
took time, money, and energy. If a physician is willing to generate the energy
for such an undertaking and is willing to endure the ranting until the legal
process completes itself, that is certainly one way to proceed.
In one of Mr. Dozier’s cases, his strategy involved first getting a HIPAA
release so that the facts of the case could be discussed. He used it to silence

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criticism of a renowned plastic surgeon undergoing a very public false attack.
When the truth was published, the former patient lost all credibility and the
incident subsided. The process was somewhat arduous and expensive, but
absolutely necessary when the patient had such a stranglehold on the doctor.

Preventing Ranting by Agreement
The medical justice agreement
Medical Justice (www.medicaljustice.com) is an organization dedicated to protecting physicians against frivolous lawsuits. Medical Justice has developed
a mechanism intended to increase control of potentially damaging content
before it becomes a problem. It has developed proprietary template language
aimed at contractually obligating the patient to follow certain rules should they
wish to publicize information about the physician’s evaluation or treatment
to the world at large. There is a small charge to the doctor for the agreement,
but the company also helps the doctor deal with the patient who attempts to
violate the agreement. Medical Justice also provides tools to address online
attacks should they occur.
The reason for choosing such a prophylactic approach is that getting the
Internet service provider (ISP) to take down the defamatory site is a near
impossibility. So, although ISPs have the ability to take down a disparaging
website, there does not appear to be any penalty to them for sitting on the
sidelines and doing nothing. More importantly, ISPs are given near immunity
for allowing purely defamatory posts to litter their site. Threatening to sue
such sites for defamation will often be followed by a letter stating that they
have neither the time nor the resources to evaluate each and every claim. More
importantly, Section 230 of the Communications Decency Act provides a safe
harbor to allow them to post without legal accountability. The government
is in effect saying that if you have a beef, take it up with the individual who
posted the commentary.
Another reason for pursuing a prophylactic approach is that the difficulties
of dealing with the patient afterwards are formidable. With traditional print
media, legal remedy is difficult but possible; the legal standard is the preponderance of evidence (>51 percent). With traditional print media, there are two
targets: the author and the publisher. In the Internet world, however, the traditional legal remedy is virtually out of reach. Many posts are anonymous, and
there is only one target: the author. The hosting website (distributor) is also
generally immune. Moreover, the legal standard for MDs as determined by at
least one appellate court is “clear and convincing evidence (>75 percent)”.

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Recently, a disgruntled patient launched a website discussing her so-called
“surgery nightmare”. The California appellate court ruled in 2007 that the
site could stay up. The surgeon was judged to be a public figure, and the
standard for defamation in that case was clear and convincing evidence of a
malicious intent. This threshold is tough to overcome in all but the most
egregious of cases. Consequently, prophylaxis is the best approach.
The mutual privacy agreement provided by Medical Justice is a one-page
document and states in effect:
• Patients shall not post online without the MD’s assent.
• Patients are free to speak with friends, family, doctors, lawyers, licensing
board members, peer reviewers, and specific reliable sites that have met
minimum standards for fairness and balance.
• As a benefit to the patient who signs the agreement, he/she receives privacy
protections beyond that mandated by law (HIPAA).
The form also has a built-in safety net which increases compliance. While
the patient is not supposed to post onto the Internet without written authorization, if he/she does, the copyright of that commentary is assigned to the
doctor, so the doctor has additional options to take damaging posts down.
All elective patients are asked to sign this document. If an anonymous post
appears, the assumption is that “John Doe” is covered by a signed agreement.
Moreover, Medical Justice stands behind their agreement and helps the doctor
deal with the unlikely patient who decides to break the agreement. It turns out
that 99.9 percent of patients are willing to sign the agreement. When patients
attempt to breach the agreement, Medical Justice helps the doctor locate an
experienced cyber lawyer (paid for by the physician) to successfully pull down
the review. In most cases, the sites have respected the agreement and taken
down the disparaging post. No case has yet gone to the appellate level. Finally,
the substantive language in the template has been reviewed by a staff attorney
for the Office of Inspector General for the U.S. Department of Health and
Human Services. The Office addresses issues related to the HIPAA and the
HIPAA Privacy Rule. They have concluded that the template language does
not clash with the provisions of the HIPAA.

Short pre-op agreements
Below is an example of a short form used by some doctors. It was developed
before Medical Justice agreements were available.
I understand that the doctor-patient relationship is a bond of trust and mutual
respect that ethically and legally precludes Dr.
from disclosing information

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(positive or negative) about me without my permission. Therefore, I too agree
not to disclose any information (positive or negative) regarding the care I received
from him without his/her permission.

It should be made clear that a physician-generated agreement of this sort
may be effective, but not nearly as powerful as that provided by Medical
Justice. In the event a patient attempts to breach that agreement, the physician
will have to get his/her own attorney to enforce it. However, those who have
used this type of agreement during the short time it has been available have
not had to do so.

What to Do
With these options, what is a physician to do?

Initial response and what not to do
• Think first and proceed with caution. Most importantly, the plastic surgeon
should think first before jumping in to action. When you are bursting to
respond to an attack, don’t.
• Study the problem. Evaluate the patient, their true motivation, and the
merits of the complaint, and then learn as much about the reviewing or
rating site as possible.
• Remember that responding even in general terms without referring to the
medical history of the patient can open up the door for the patient to
respond a second time, often with worse criticism than in the first rant.
Other users of the Internet are also likely to follow with their opinions, most
of them negative. An avalanche of defaming comments may thus result —
a process known as “flaming”.

Consider contacting the patient
Some surgeons have tried the following approaches:
• Contact the patient and reason with them. One surgeon explained to the
patient (who was willing to take his phone call) that he was terribly upset
that the patient had a post-op infection. He had no idea how it occurred, and
he reminded the patient that he took every appropriate step to eradicate it.
He reminded the patient that the problem did resolve itself and that he was

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available to her at all times to deal with any residual issues she might have.
The patient understood and pulled the review.
If the rant indicates that the patient would only refuse your contact
attempt, ask an associate of yours who was involved in the patient’s care
(and whom the patient has no quarrel with) to contact the patient. The
associate is much more likely to have a reasonable conversation with the
patient and determine the underlying issues leading to the rant.
• Return the patient’s fees. You can return the patient’s fees in return for the
patient to sign an agreement that they will take down the negative blog
and not post any negative comments on the Internet in the future. This
agreement should be in addition to the standard legal release provided by
the malpractice carrier.
It should be made clear that talk of returning money may just as easily put
the doctor in a position of being extorted by the patient. The patient may
see the doctor’s offer as an opportunity to demand even more money. If the
doctor does not agree to it, the patient can easily go online to announce
that the doctor tried to “pay him/her off” and therefore must be guilty of
the charges in the rant.

Play the reviewer game
Offset a negative review with positive reviews. Ask patients who are extremely
pleased with their surgical outcome to register with Yelp.com or other rating
sites and post a brief summary of their positive experiences. They can do this
anonymously. Virtually all patients will agree to do this, but no more than half
may actually take the time and effort to follow through. However, all these
positive reviews help. Do not expect your new positive review to be placed at
the top of the list. Yelp admits to arranging the reviews in any fashion they
choose. Often, the negative review is at the top to encourage you to purchase
advertising space to move it down.

Legal choices
• The single best solution to all future blogging and negative reviews is to
prevent them via pre-op agreements.
• An aggressive formal legal attack should be reserved for a situation that is
unacceptable because of its potential massive impact on the financial health
of the practice or on the doctor’s reputation.

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Maintain the best doctor-patient relationship
Keeping in mind the potential disastrous damage that each and every patient
can cause, it should be obvious that every patient should be kept as happy
as possible. When a physician is confronted by a patient who is disrespectful, difficult, or nasty, it is tempting to respond disapprovingly or be dismissive. However, this approach is potentially disastrous. Every patient has to be
treated with great care.

Future Actions That May Take Place
Changes in the law
Some state legislatures have been made aware of the inequity that currently
exists because health care professionals are unable to properly respond to
defamation in part due to HIPAA regulations.

Class action lawsuits
It is possible that a single lawsuit or a class action lawsuit may be filed regarding
questionable business practices that some reviewing sites are involved with.
Requesting reviewees to pay for advertisements on their site so that an unfavorable review will be placed in a less conspicuous position has raised the
question of extortion.

Ranting patients may be violating HIPAA regulations
Some doctors and attorneys believe that the patient may, in certain situations,
be precluded from publicly divulging information related to the medical treatment process for the same reason that the physician is.
This reasoning is based upon three commonly unrecognized premises:
• The doctor-patient relationship is a dual, interdependent (albeit asymmetric) relationship for a successful health care outcome.
• The doctor, like the patient, may unwillingly become a patient (involving
mental distress) in this asymmetric but symbiotic relationship.
• All persons, patients included, are subject to HIPAA regulations — not just
health care professionals.
Therefore, neither the doctor nor the patient is entitled to disclose details
of the medical events that have led to the patient’s complication or will lead to

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the doctor’s psychological condition emanating from the patient’s rant. Each
of these premises will now be discussed in turn.
A plumber does all the work for his customer. In contrast, patients participate in the outcome of their treatments. They are frequently responsible for
the complications that they sustain. They may fail to notify the physician in
a timely fashion when a problem occurs. They may fail to take their medication in the fashion prescribed. They may neglect proper care of their surgical
wound. There is a lengthy list of responsibilities that patients have toward
the successful outcome of their care. To a small or large extent, patients are
contributors to the outcome and complication of their own medical problem.
Ranting against a doctor who is unable to defend himself or herself is usually a painful, stressful process affecting the mental health of the health care
provider. It takes little imagination to appreciate that calling the surgeon a
butcher publicly over the Internet for thousands to read about can be devastating to the professional. The social stigma of castigation has caused anxiety
and depression for many health care providers. Some of these victims of an
unrelenting ranting and blogging campaign have had to see psychologists for
support. This emotional condition has sometimes been called Internet distress
syndrome (IDS). The doctor may, of necessity, become a patient.
Ordinarily, HIPAA regulations apply to health care professionals, insurance
companies, and pharmaceutical companies because understandably the patient
population needs to be protected from the abuse of their private information.
However, persons unrelated to the medical industry must also respect this
privacy. California enacted Assembly Bill 211 to expand the usual HIPAA
regulations to every individual in the entire state. The patient is not exempt
from HIPAA regulations. The penalty can be severe:
Any person or entity [emphasis added] who is not permitted to receive medical
information … and who knowingly and willfully obtains, discloses, or uses medical
information without written authorization from the patient shall be liable for a
civil penalty not to exceed two hundred fifty thousand dollars ($250,000) per
violation.

This legal case is based on California law. However, it is likely to be perceived
as “persuasive” in other states, just as are other California state laws.
Thus, if the patient discloses on the Internet information about his/her
own complication (that he/she is partly or totally responsible for) along with
the name of the doctor, the patient is disclosing protected medical information
belonging to the doctor who had to seek counseling from a psychologist
(as a result of the patient’s rant). After all, HIPAA regulations define health

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information as “any information, whether oral or recorded … , that is created
or received by a health care provider … and relates to the past, present, or
future physical or mental health or condition of an individual” (Public
Law 104–191; emphasis added).
If the physician believes that the patient has contributed to the complication of which they rant and if their diatribe is a truly stressful experience,
consideration should be given to the following:
• Tell a therapist how the patient’s rant impacts your life.
• Contact the Department of Public Health.
Below is as sample notification to the Department of Public Health.
Dear Sir/Madam:
I believe that Ms. Smith has violated my medical privacy. I have seen Dr.
Jones, a psychologist, for stress caused by Ms. Smith. She is a former patient
of mine who sustained a complication in part because of her own negligence
and then proceeded to defame me on the Internet. She released protected
health information — the nature of the complication — which is part of my
medical history.
HIPAA regulations define health information as “any information,
whether oral or recorded … , that is created or received by a health care
provider … and relates to the past, present, or future physical or mental
health or condition of an individual” (Public Law 104–191; emphasis
added).
Yours truly,

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Recognizing and Dealing
with Stress: A New Model
of Resilience
Stephen Sideroff, PhD

Introduction

O

ver the last 30 years, I have addressed the consequences of the stressful
lifestyles of high-level performers in business, health care, and sports.
A number of factors conspire to mask these consequences. High performers
have a natural tendency to minimize or ignore the effects of stress. Those with
busy lives are easily distracted from such manifestations of stress as tension, an
increase in heart rate, or irregular breathing patterns. This lack of awareness
of the physical signs of stress is facilitated by a gradual adaptation to higher
and higher levels of body activation. High performers perceive their higher
body activation as normal, until finally the toll that it has taken cannot be
ignored.
Stress activation in many high-functioning individuals becomes addicting,
making them feel more alive as the adrenaline gets pumped through the body.
As one cartoon of an executive noted, “I save time by not unwinding.” My
clients, whether executives or physicians, find that their underlying insecurities
fuel the need to continually produce. Taking a break from productive activity
actually creates anxiety. With this in mind, I set out to develop a method to
help high-functioning professionals that would take into account their innate
resistance to addressing the causes of stress. Below the reader will find my
program of resilience, which is the result of this effort.
As physicians, you are not immune to the consequences of the same stresses
that bring many of your patients to your doorstep. In fact, numerous factors in
physicians’ lives augment the level of stress-related problems beyond that seen
in the general population. Whatever one’s profession or career, ignoring the
impact of stress leaves one vulnerable to physical, emotional, cognitive, and
behavioral symptoms. Disregarding symptoms and ignoring stress can impact
the quality of life as well as professional performance. Those who are least
aware of their stress and its consequences are at higher risk of suffering from
377

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its unpleasant results. In this chapter, you will learn about these potential
consequences, what leads to them, as well as the specific characteristics of
physicians and their medical practice that make them more vulnerable to
stress-related problems. I will then develop a new model of resilience to give
physicians some of the best strategies for optimal functioning. You will also
note however, that success in this process has one initial requirement: your
commitment to engage in the process!
While we all know in the back of our minds what stress is, we rarely consider
it as something to be concerned about until we feel overwhelmed or experience
a physical symptom (such as headaches, insomnia, or elevated blood pressure).
Even then, we may not make the association between these symptoms and
stress. In fact, physicians are frequently the last to make this connection in
themselves. They may focus on treating the symptoms or physical problems
with medications and other clinical solutions.
While focusing on their practices, physicians typically find no time to ponder the impact of their fast-paced lives. Even when they do, the most common
response is simply, “Life is stressful,” or “Being a medical doctor is stressful.”
This sense of helplessness makes physicians less capable of making the necessary changes to improve their quality of life.
Following is a brief picture of stress as you likely experience as a physician,
your stress response, and its insidiousness in your life.

What is Stress?
Stress is an environmental-organismic interactive process. When an environmental event is interpreted as being dangerous or threatening, it triggers a
stress response, readying us for “fight or flight”. In fact, any uncertainty
can trigger this response, which mobilizes the body for danger. The stress
response involves all systems in our bodies, activating some and shutting down
others. Virtually all the body’s energy gets funneled into this fight-or-flight
response. It is interesting to note that a surgeon’s heart rate often doubles
during surgery.
This reaction to stress is a survival adaptive response. No one, not even
a successful physician, is immune to this activation process. Any perceived
demand, uncertainty, threat, conflict, or danger can induce a stress response.
Even a threat to one’s ego or self-esteem can elicit a stress response.
Briefly, our stress response is the evolutionary adaptive mechanism that prepares us for any danger. Every physiological system in our body is affected. Our

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musculoskeletal system mobilizes, bracing and tensing muscles. Our nervous
system activates, dilating our pupils and triggering a release of adrenaline and
other hormones. These hormones mobilize energy sources and facilitate the
speed of blood clotting in case of a wound (which is good for when we are in
battle, but not very helpful if you have any sort of cardiovascular disease). Our
pupils dilate, our blood pressure rises, our heart rate goes up, and our breathing becomes more rapid and shallow. While some systems are being activated
to prepare for danger, other systems that are not of immediate use in the face
of danger shut down, such as the digestive, reproductive, and immune systems. That’s right: the immune system will not help you during an immediate
danger!
Real 21st-century danger rarely requires the automatic mobilization that
takes place in our bodies. Stress involves the engagement of an adaptive survival mechanism that has developed over the previous millenia. The problem
is that we have not evolved beyond the stress response of our hunter-gatherer
ancestors of 10,000 years ago. No matter what the source of the stress or
danger, we are committed to a fight-or-flight response.
Unlike our stress response, our civilization has moved light years during
these past 10,000 years. The sources of our stress and the type of response
they demand are now out of sync with our body’s adaptive mechanism. Most
present-day stressful situations do not require a response that would allow
our bodies to expend energy and release tension. So, for example, with a time
pressure or financial crisis, our bodies will go into a hunter-gatherer stress
response — the only one we have — and there is no mechanism to release
the energy generated. Instead, more energy is directed toward constraining
this mobilization. Furthermore, if a stressful situation does not immediately
resolve, as is the case with most present-day stressful situations, the body will
do the only thing it knows: it will up the ante and intensify muscle tension,
increase cardiovascular output, etc. Over time we adapt to these physiologic
changes, and we do not notice these higher levels of tension and activation.
In an ideal healthy lifestyle, the stress response and its activation of the
sympathetic nervous system would be balanced by its opposite response,
the parasympathetic recovery and relaxation mechanism. The energy and
resources used up in the stress response would then be replenished. The tension resulting from stress would be released during a period of relaxation. In
fact, the organismic imperative is to maintain this balance, or homeostasis.
The one thing that will take precedence over this optimal physiologic balance
between the stress response and recovery is perceived danger. Danger elicits
fear and a fight to survive.

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Life in the 21st century is stressful. Threats, worries, and pressures activate
the stress response throughout the day. This is compounded by our tendency
to scan our environment for problems. When we find a problem, the stress
response is retriggered, even if a previous problem was solved. The result is
an almost constant triggering of this mechanism without any downtime for
recuperation.
The term “stress” actually subsumes different components. The source of
stress is the stressor or stress trigger. One’s reaction to the stressor, or mobilization, is the stress response. The stress response is different from the stressor,
although the two terms are frequently confused or globalized to refer to the
same process. The distinction, however, is important, as it is at the heart of
our ability to manage stress, or what I prefer to call “resilience”.
In our modern world, stress is a very subjective experience. We no longer
live on the edge of survival, where the imminent danger of a tiger springing
out of a bush triggered our instinctual stress response. Instead, we experience
an external event or one conjured in our heads, and then we interpret it.
The interpretation is usually instantaneous and unconscious: is this situation
dangerous? An interpretation of danger, potential danger, or uncertain threat
triggers our survival mechanism.
Here is a simple example. Let’s say you are walking down the street and
you see a colleague walking toward you. Just as she gets close and you are
about to say hello, you see a frown on her face, and she passes without even
an acknowledgment. One response is to think, “She didn’t say hello. Why did
she ignore me? Did I say something in our last encounter that caused her to
be upset with me? Is she angry with me? What’s going to happen next?” This
encounter just triggered your stress response. In the same situation, another
person might have a very different internal thought process: “Gee, I wonder
what is upsetting Jane. Perhaps she woke up on the wrong side of the bed?
Maybe she has a toothache?” This person, in the same situation, will walk
away relaxed and not think any more about it.
Now let’s add one additional element to this stress mix. If you come home
to a peaceful house, and you begin thinking about some stressful event tomorrow, this thought process will also trigger the stress response. The activation of
your stress response can then make it difficult for you to fall asleep, cause a distancing from family, or even make you irritable enough to trigger a fight, thus
adding additional unnecessary stress to your already stressful life! Consider
this caveat: a one-hour stressful event that you focus on intensely can turn
into a 24-hour stressful experience.

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Stress as the X Factor in Health and
Performance
Hans Selye, the famous researcher who took the word “stress” from physics
and applied it to human behavior, said, “Aging is simply the sum total of all the
stresses we place on our bodies.” According to most estimates, over 70 percent
of physician visits are for symptoms that are caused by or exacerbated by stress.
Early childhood stress and trauma impact the functioning of the brain, leaving
it sensitized and reactive to life events of all kinds. This sensitization increases
the risk of both physical and emotional symptomatology. We now believe that
many types of chronic pain result from the ongoing hypervigilance of the
nervous system caused by excessive childhood stress and trauma. This is also
true for anxiety and depression.
The result of chronic stress takes its toll on performance and mental acuity. All stresses can trigger the survival mechanism, shifting brain activation
to the lower survival centers. The prefrontal cortex, where decision-making
takes place, can then short-circuit, potentially resulting in greater stereotypy
in thinking and behavior.
Stress results in strain, manifested as chronic arousal. This is not simple
wakefulness, but persistent heightened mental and physical alertness, and it is
exhausting. Research shows that doctors are chronically aroused.1 This stress
can result in burnout, which is an emotional and physical exhaustion, resulting in poor self-image, negative attitude to work, and a drop in personal
involvement.2
Success can be an illusion. When we are being productive, making money
and otherwise fulfilling our roles, we automatically assume that everything
is okay. Unfortunately, success only masks the disequilibrium we experience
with chronic stress. The effects of stress we experience may be equally present,
whether we are successful or whether we are failing.

Unique Stresses of the Physician
Physicians are not immune to the effects of stress. Stress is an equal opportunity employer. In fact, there are a number of factors, including personality
traits and the practice of medicine itself, that make physicians more susceptible
to stress and its consequences.

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Several studies reveal that a growing number of physicians experience
stress and burnout, and a large number are dissatisfied with their work life.3−8
According to a study carried out by the Canadian Medical Association, almost
half of the responding physicians reported symptoms associated with advanced
stages of burnout.9
The difficulty for physicians comes from two directions: the particular
demands of a medical practice and the personality characteristics common to
physicians. First, let’s review the contributing factors of a physician’s job.
The medical profession holds a high premium on the physician’s being
right. The physician is expected to be all-knowing, making the admission of
mistakes fraught with implications of incompetence. The role of the physician can be idealized by a public that wants to believe in physicians’ infinite wisdom. This expectation of perfect knowledge clashes with any uncertainty that a physician experiences. Uncertainty in a physician’s career naturally arises out of the inadequate training for fundamental professional tasks
including making financial decisions, running a business, and handling difficult
patients.
As private medical practices become more of a business, there is a struggle
to maintain high standards of care with fewer resources. The stresses of doing
more with less are intense. Frequently, physicians are presented with demands
that cannot be reasonably met. Often those demands compete with the time
necessary to remain current in one’s specialty, leading to more uncertainty
and exacerbating concerns about litigation and complaints. Physicians deal
with intensely emotional aspects of patients’ lives, which can have negative
reverberations in their own lives. In summary, there is a high demand on
physicians, diminishing resources, and frequently a perceived loss of control
along with fewer rewards or support.
Leaving those stresses at work at the end of the day is difficult, so
most physicians carry their professional concerns and worries home. This
round-the-clock preoccupation leads to consistently high levels of tension
and stress, which can impact family relationships. Family time then becomes
stressful, instead of being a source of comfort and release from the stresses
of work.

Unique personality patterns of the physician
Physicians’ job stress is further magnified by certain personality traits common
to many physicians. These personality characteristics are part of the reason
for success, but they also increase one’s vulnerability to stress. Physicians are

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typically exceedingly conscientious. They tend to be perfectionists who need
to be in control. Their attention to detail and attempt to meet everyone’s
needs take considerable time and energy. While trying to please everyone,
they frequently feel they are pleasing no one. Physicians’ exaggerated sense of
responsibility leads them to feel the need to fix things, even when they have
no control over the problem. They often feel guilty when they are unable to
meet these perceived responsibilities or expectations. This heightened conscientiousness takes an extraordinary amount of time and energy. The effort to
do more, and to do it perfectly in less time, makes it difficult for the physician
to relax, recuperate, and take care of himself or herself.
Physicians constantly strive to do more, be better, and succeed at everything. Yet they have difficulty accepting positive feedback and recognizing
their success. Praise is often dismissed or minimized, leading to self-doubt
and insecurity. The need to be right and perfect makes it very difficult to
acknowledge or express feelings. This leads to the bottling in of emotions,
which is another source of stress and physical imbalance.
Finally, these personality patterns that are common to most physicians
make it difficult to shed this role of perfection at the end of the day. Physicians
typically have difficulty being vulnerable and open at home with family. This
stoicism prevents the necessary release and the accompan