Physicians and other providers need to take additional steps to protect hard-earned business and professional assets. You’re busy growing your practice, and you may think that having a will or trust as well as a standard-issue property and liability insurance policy is sufficient protection.
While insurance is a necessary part of any asset protection strategy, other factors, such as its legal structure, are equally important.
The main thing to remember is to act now. Too many physicians and other business owners defer taking steps to adequately protect their assets, as well as the very business that generates income, until it’s too late.
What should a good asset protection plan include?
Legal structures of your personal and professional assets that are applicable to your unique situation need to be evaluated and implemented under the guidance of your attorney well before there is any need. Your personal assets, such a car and house, need to be segregated from those of your profession and business. If you own real estate in your own name, for example, it could be exposed to both personal and professional liability. Likewise, having real estate for personal use in your practice’s LLC name can mix risk across assets that should be kept separate.
Entities should be structured with operating agreements rather than just recording an LLC, be funded with title transfers, have a legitimate business purpose assigned their own tax ID numbers and separate bank accounts.
Personal Insurance offers high limits for liability protection, ideally with no less than a one-million dollar “umbrella” policy. It’s always a good idea to work with an independent insurance agent who’s experienced in writing medical practice and multi-line policies and can tailor one for your specific needs and goals. A good agent will explain the various features and advantages of different types of coverage, prices, exclusions and riders, as policies can vary widely depending on carrier. No matter how comprehensive your personal coverage may be, you will still need more specific protection for your practice itself.
Business Insurance needs to consist of more than a hodge-podge of a general liability insurance policy, medical malpractice insurance and a workers’ compensation plan. Inadequate specialty insurance and other gaps in protection, including billing, regulatory, data breaches, as well as director’s and officer’s liability coverage or omissions due to buying a cheaper plan can be financially fatal to an unprepared practice. This is not the area in which to try to cut corners to save money, as your agent will surely point out, when the cost of litigation alone for poorly prepared businesses can run into the six figures.
Waiting until there is an expensive claim against the practice is no time to learn that your coverage is more limited than you’d expected. Just as a house can’t be insured for any amount once it’s burned, neither can your underinsured practice increase protective coverage once a significant liability claim has been filed against it.
Disability Insurance for yourself, as well as any key and high-producing partners, is essential. Be sure that your disability coverage provides for the fixed business and personal overhead costs that can go unpaid if income – whether yours or that of a key producer – is reduced or lost. Agents who are simply “order-takers” that sell only what is asked, especially by providers hesitant to spend any amount of money on what they perceive as unnecessary expenses, are doing their clients no favors. Buying insurance at the top of your coverage-limits budget is the best way to protect your wealth and the practice that creates it form predictable as well as unpredictable risks.
Managing other forms of risk
Limit employee access to records and other cyber security safeguards
Physicians should take the time and effort to see that all staffers are completely trained in HIPAA and limit secure password access to only those staffers who need access to perform their duties. Failure to do so is to invite unauthorized use and viewing of restricted documents, with the consequences resulting in hefty fines or worse.
Physicians who allow these types of activities within their practice are not only negligent but could lose their medical license and Drug Enforcement Administration (DEA) registration. Employees who are unauthorized to order lab tests, write prescriptions, or share confidential patient information with others and other questionable activities could be charged with criminal actions, such as practicing medicine without a license as well as insurance fraud if billing a payer, thus putting the physician and practice at legal risk.
To prevent data abuse and misuse, your IT information technology) system should be able to track access to all forms of activity, including whenever a record is created or test ordered. To be able effectively practice medicine in today’s HIPAA-regulated environment requires both current and applicable technology as well as training and enforcing all users in HIPAA compliance.
Use caution when replacing and discarding computers
Practices, like other businesses, often take advantage of year-end sales and extra taxable income to upgrade or replace business equipment, including computers and other data-storing devices, such as tablets and smartphones. Before you discard these, be sure to do the following:
- Secure all old equipment in a restricted-access location prior to disposal
- Include a written chain-of-custody record, including signing out all users and disconnecting from your networks
- Wipe all data from discarded devices; you may want to turn this critical task over to IT professionals
How can partnering with a medical billing service reduce asset risk?
M-Scribe has been a trustworthy partner for hundreds of medical practices of all sizes and specialties since 2002. Our state-of-the-art technologies using cloud-based platforms and other technological enhancements increase your claims’ security while keeping you compliant of HIPAA confidentiality regulations.
Contact us at 770-666-0470 or email for a free consultation to learn how we can help you grow your practice by increasing reimbursements and improving your overall revenue cycle management, while protecting patient confidentiality- and your good reputation and practice.