Healthcare is a business — a fact not hammered home in medical or nursing school. Maybe that’s why healthcare consultants exist. David Williams is one such consultant, and the company he cofounded, MedPharma Partners, focuses on healthcare technology and pharmaceuticals. He also happens to write about the business side of healthcare, with a focus on healthcare technology, at the aptly named Health Business Blog.

Recently, David sat down to talk about what healthcare consulting entails and its future as the American healthcare system changes.

Colin Son: Describe what it’s like to be a healthcare consultant.

David Williams: I’ve been interested in healthcare business and policy for a long time. When I was in high school, I developed a computerized clinical decision-support tool for a VA hospital, and in college I had a summer job at the Urban Institute studying malpractice insurance reform. I then worked for McKinsey during another summer and ended up as a consultant at L.E.K. after graduation, where I worked on lingerie manufacturing in Hong Kong and China, among other nonhealthcare assignments.

When I graduated from business school, I started putting healthcare and consulting together at the Boston Consulting Group (BCG). It was during Clinton’s first term, and the failed healthcare reform efforts touched off a lot of activity in the private sector, which we consulted on. I worked on nonhealthcare projects at BCG, too, but found healthcare to be the most meaningful and satisfying.

In 2001, I decided to leave BCG to consult for smaller, more entrepreneurial companies. An early client was RelayHealth (then called Healinx), where we helped develop a successful business model that enabled the company to prosper and eventually be acquired by McKesson. In 2003, I teamed up with former colleagues to found MedPharma Partners, a boutique firm that provides healthcare strategy consulting to large and small organizations within technology-enabled healthcare services, pharma, and biotech. Some of the most satisfying work has been with not-for-profit organizations such as the Forum for Collaborative HIV Research and the Massachusetts eHealth Collaborative, where we’ve helped develop and implement sustainable business models.

Of course, the Health Business Blog also has been a passion, for the past 4 years.

Colin Son: I’m sure it gives you a unique perspective on the current US healthcare system. How do you think we should be framing the debate on healthcare reform?

David Williams: One theme that’s underemphasized is the role of entrepreneurs in shaping healthcare reform. As I’ve written, we don’t have to wait for top-down efforts to see improvements in cost, quality, patient safety, access, and customer service (aka “patient experience”). Many entrepreneurial companies and not-for-profits are working on these issues today. I’m proud to say that quite a few of them are our clients.

Colin Son: What do you think is the future of healthcare consulting?

David Williams: We’re going to have an extended period of tumult in healthcare, which will mean a steady or increasing need for people who understand the business of healthcare and can advise others. Big pharma, which has been a major user of consulting, will continue to decline. But healthcare services have a bright future.

Read more articles at Medscape.com.

Today it’s estimated that less than a third of medical practices use physician extenders. Some physicians don’t want to or don’t see the need. However, as our healthcare climate continues to evolve, there are more reasons than ever why physicians should consider adding nurse practitioners (NPs) and physician assistants (PAs).

1) Potential changes in healthcare present an opportunity for physicians.

If universal healthcare coverage becomes a reality, more than 40 million people will enter the mainstream healthcare system. There’s also talk of patients having a Medical Home, which would drive even more healthcare delivery and management to the primary care physicians.

To care for the new patients, we would potentially need an additional 10,000 physicians. However, according to the US Department of Health & Human Services, the increase in the supply of primary care physicians between 2005 and 2020 is anticipated to be only 18%, on the basis of anticipated population growth and the aging of our population.

However, PA and NP programs combined are delivering over 10,000 providers into the system annually. Realistically, the only practical solution will be for physician extenders to help satisfy the demand.

2) Competition may require it.

Physicians have seen an erosion of patients to minute clinics, other retail clinics, and physician practices that have extended hours: Saturdays, evenings, lunch hours, and early mornings. Although open access and other forms of scheduling can increase your hours, there’s nothing like a physician extender to enable your practice to see more patients sooner.

3) In a time of declining reimbursement, physician extenders can help boost revenue.

The typical PA brings in revenue of $231,000 with an average salary of $84,000, according to The MGMA Physician Compensation and Production Survey: 2008 Report Based on 2007 Data. After covering the cost of his or her own salary, benefits, and incremental overhead a typical PA can boost your bottom line by an estimated $30,000 or more.

4) Ancillary services can bring in more revenue, but often you’ll need additional qualified personnel in order to provide some of those services and still see as many patients. In addition, extenders can help generate more ancillary revenue because ancillary service volume is driven by office visit encounters.

Objections

Despite the foregoing advantages, many physicians are still reluctant to add physician extenders. Physicians who I’ve spoken with have given these objections.

PAs and NPs don’t fit with the culture of my practice.

This is because you have not incorporated them into your practice, so of course they are not a part of your current culture. Extender services need to be thoughtfully added. If you hire on the basis of intelligence, attitude, and personality, you can maintain your practice culture without any problem whatsoever.

I don’t have the space to add another person.

Space requirements definitely need to be addressed. Relatively speaking, space is cheap. You should always err on the side of having a little extra clinical space so that your production is not hampered. Loss of production costs a lot more than extra square footage. It may be time to look at relocation. If you are truly short on space, do not try to add an extender with the assumption that you will make-do. Enough space is a necessity.

I’m reluctant to invest in the additional overhead; what if I hire this person and then my volume declines or my income drops?

Taking risks is part of being a business owner, and the flip side of risk is reward. If you go about it correctly and hire the right extender(s), it will be worth the investment. Talk to colleagues who are using extenders successfully to find out how it went for them, and consider bringing in a practice management consultant to help answer questions about your specific practice infrastructure and how to plan for the addition of 1 or more extenders — and keep in mind that every practice is different.

I don’t know how I’ll divide the current workload; this will change my whole workflow of the office, and it may become chaos.

It may sound obvious, but your NP or PA should handle patient encounters that do not require the training, knowledge, and experience of a licensed physician. Remember that you will be there to step in and/or field questions as needed. You will also want to fill the extender’s schedule before your own. This sounds backward and maybe a little uncomfortable, but your schedule will fill up. Make sure that you do not compete with your extender(s) for patients, but instead ensure that they are as productive as possible.

It is true that not every practice needs physician extenders. There are situations in which these staff members are less valuable: if you’re a few years away from retirement and are winding down; if you’re content with the way your income has been going and have no desire for changes; if you don’t want the additional management and supervisory responsibilities.

Like anyone, you need to enjoy your work and not dread going to the office, so if the addition of extenders would create more stress and anxiety for you, it wouldn’t make sense to add them.

Other physicians who incorporate extenders and learn to delegate the work that can be done by a nonphysician should experience higher practice profitability and enjoyment. Put your energy toward figuring out how to most effectively, efficiently, and profitably position your practice to sell your product to 40 million new customers.

If you have a question that you’d like this column to address, please send your questions to BusofMedEditor@medscape.net.

Read more articles at Medscape.com.

Whether you need an examining table, a Holter monitor, ultrasound equipment, or a nuclear imaging camera, you can save from about 30% to 50% or more by buying used equipment. While there are plenty of good deals available, you need to be careful so that you’re not stuck with a lemon, or end up with machinery that’s in far worse shape than described.

“Three years ago, doctors wanted to buy everything new and take out a loan to pay for it,” says Mark Zirinsky, President of PEMED ( www.pemed.com ), a used medical equipment stocking dealer in Denver, Colorado. “Now the focus has gone away from getting equipment that’s brand new and is the latest and greatest. It just has to work and be okay.”

“Our traffic is up by about 20%,” adds Robert Garment, Marketing Director of DOTmed ( www.dotmed.com ), an online marketplace of new and used equipment. “One reason is that some big equipment manufacturers that previously financed heavy-duty imaging equipment no longer do so.”

A nuclear medicine camera that cost $300,000 new sold for under $200,000 when it was about 2 years old, with the same warranty, notes Richard A. Staab, president of InterMed, a medical technology service company in Alachua, Florida. A fully loaded LifePack defibrillator, which could retail for $16,000 to $18,000, sold for $7,000.

Buying used equipment can save anywhere from about 30% (just because it’s not new) to 70% (if the item is old or in fair or poor condition). “Typically, the price of used equipment is 50% of the original price,” says John M. Krieg, publisher of Medical Dealer magazine and President of MDPublishing, a company involved with the used medical equipment industry.

Buying used equipment makes sense when the technology hasn’t changed much; when you’re strapped for cash or are starting out in practice; and when the device itself has a proven record of performance — like a car known for top performance that holds its value over many years.

For that reason, ultrasound equipment is among the top-selling items, says Garment. “The technology hasn’t changed radically. A used ultrasound or refurbished CT will get the job done.”

While some used equipment can be in terrible condition, much of it is high quality, says Krieg. “Used medical equipment dealers get their stock from hospitals that purchase new equipment and no longer need their existing equipment, through liquidation or doctors going out of practice, or sometimes directly from the manufacturer when it takes a trade-in.”

Beware of the Pitfalls

Still, there are downsides to buying used medical equipment. You won’t get the training on complex equipment that you would typically get with new pieces. Instructions may be missing. The equipment may be difficult to have serviced.

Some purchasers have complained that the equipment is in worse condition than described, that it’s not what they ordered, or that there were lengthy delivery delays.

You also won’t always get the convenience that comes with buying new. “Don’t expect a liberal return policy,” says Zirinsky. “Some people expect a 90-day trial. That’s not a realistic expectation.”

Finally, you may have to make your own delivery and installation arrangements. The seller will typically not come to your office or clinic to install the equipment, although some companies facilitate such arrangements for an added fee.

To avoid getting burned, be cautious and do plenty of research. The following guidelines can help.

Where to Find Used Medical Equipment

About 4000 companies participate in the used medical equipment market, according to Krieg. There are also numerous online used equipment brokers and marketplaces where you buy from the individual owner, and eBay lists some used medical equipment.

It’s important to deal with a reputable company, not only because they’re more likely to be trustworthy but because you may have some recourse if something goes wrong. Start by asking for recommendations from colleagues, or check with your local medical society. Investigate any company you’re considering, and look for a solid business record and testimonials from credible sources. Ask for references as well as whether they sell their own used equipment as well as new pieces.

One source of information about used medical equipment dealers is the preferred dealer list at www.MDPublishing.com . Or check the directory at the International Association of Medical Equipment Remarketers & Servicers ( www.iamers.com ). IAMERS also has an annual industry trade show — MD Expo — where dealers display the equipment they’re selling.

Types of sellers include dealers, online marketplaces, and brokers. A dealer has the equipment in stock and is more likely to refurbish and improve some of the equipment being sold. A marketplace hosts listings from individuals or institutions with equipment for sale. If you don’t see the piece of equipment you want, a broker will try to find it for you.

If you buy at a marketplace, look for one that screens or evaluates sellers — such as eBay’s seller feedback ratings. DOTmed, an online medical equipment marketplace, asks users to rate other users with whom they have done business on a scale of 0 to 5 stars. The site also keeps a blacklist of users no longer welcome because of problems or ethical violations.

Used medical equipment might be sold through an auction or as a straight purchase. Make sure you research the appropriate price range for the product you want. Unlike the used car market, there’s no Kelley Blue Book with values for used medical equipment. You’ll have to do your own comparison shopping.

How Do You Judge the Equipment’s Condition?

Just as with buying a used car, kicking the tires isn’t good enough. You need to do research and be cautious.

Refurbished equipment is often of good quality. “Similar to buying a preowned certified car, you can get a refurbished machine that would come with warrantee, parts replaced, and software upgraded,” says Garment. “Or you can buy equipment in ‘as-is’ working condition, and you take your chances.”

Refurbishing often includes repainting and other cosmetic improvements, which can be important from a “patient-confidence” perspective — patients want to feel that the technology is first-rate.

“With refurbished equipment, most dealers will bring the machine up to the original manufacturers’ specifications,” says Krieg. “You’ll save less on it, but you’ll typically get a warranty and some service.”

Buying used equipment “as is” can be dicey. Although hardly failsafe, some used equipment sellers have a rating system to help the buyer gauge the machinery’s condition. For example, PEMED classifies their equipment into such categories as “new in the box,” “works well,” “some scratches,” “shows signs of use,” “needs repairs,” or “cosmetically poor.”

Still, there are no guarantees. If possible, test the equipment to make sure every function works, advises Krieg. Very expensive equipment may warrant a trip to the seller who has it in stock. Or if you don’t feel comfortable evaluating the equipment yourself, hire a technician with experience on that machine to test it.

If you’re buying from a dealer, ask for a contract. During the contract period, the dealer has full responsibility toward any malfunction of the equipment, says Krieg.

Pay Attention to Training and Service

How to use an examining table is pretty obvious, but a digital fluoroscope is another story. “Some pieces came with books, training, and instructions when they were new, but now the original instructions are missing,” says Garment. “The selling company may or may not provide training for used equipment.”

“The availability of training should always be a focal point for new or used equipment. Make sure additional support is available,” Krieg adds.

Check with the original manufacturer, which may provide training or instructions — for an additional fee — even if you bought the machine used. Or look into third-party training and service companies that support used equipment. Independent service organizations, such as InterMed, have specialists and trainers to service biomedical, nuclear, ultrasound, and computed tomography equipment.

Mistakes to Avoid When Buying Used Medical Equipment

Getting used medical equipment is often financially wise, but potential pitfalls abound. Here are some common mistakes to avoid:

• Don’t buy the wrong equipment for the space where it will be used. Some buyers discover after delivery that the space wasn’t big enough to allow people to walk around the equipment and use it easily, or that the building lacks the power to support the equipment. Check the original manufacturer’s specifications to learn about the needs of the equipment.
• Anticipate features you might need in 6 months or a year, not just what you need right now. No matter how attractive the price, if you have to resell the equipment or you can’t provide important new services to your patients, it wasn’t a bargain.
• Research the price range for a particular piece of equipment. Although price varies by seller and condition, there is a generally acceptable range for pieces of equipment, says Krieg. If a seller is asking much less than the going rate, investigate to see whether there are hidden flaws.
• Find out how much training and service are required. You may be wise to pay more for a piece of equipment that is easier to use and service than one that will cause problems or that you won’t be able to use effectively.
• Remember to consider installation in your pricing and purchase arrangements. Brokers and dealers typically do not install the equipment, although some companies facilitate installation arrangements for an additional fee.
• Ask colleagues about their experiences buying used medical equipment. One way is to post on Medscape Physician Connect and hear from other doctors.

Read more articles at Medscape.com.