Madison Wellman is a business opportunity specialist for Worcester nonprofit RCAP Solutions, who provides free small business business assistance. Reach him at (774)239-9783 or mwellman@rcapsolutions.org.
Updated: November 14, 2022
know how
Tips for healthcare-minded entrepreneurs
By Madison Wellman
Most Americans are aware health care is big business. We are all familiar with the hospital networks, health insurers, and pharmaceutical firms existing within our healthcare system, and the large amount of money they generate. McKinsey & Co. estimates earnings in the healthcare services and technology sector will grow by 8.2% for the first half of the 2020s, reaching a projected profit pool of $70 billion by 2025. There is an immense amount of opportunity for an entrepreneur in the HST space; but what should a non-clinical professional know before taking the plunge?
1. A good attorney – Every small business should have some legal representation, but in some industries, it is more important than others. In health care, a qualified attorney who understands both federal and commercial payers is a must, and bonus points if the firm has a staff compliance officer. Make sure your attorneys are using agreements tailored to your business, not templates; make sure conflicts are settled in your state, and finally, avoid arbitration if possible. Arbitration is great for preserving relationships but poor for holding bad actors who want to skip out on their obligations accountable.
2. NDA & BAA – If your business handles sensitive patient data or works directly with clinicians and providers, you will need a proper non-disclosure agreement and business associate agreement.
The NDA is self-explanatory, but the BAA allows your business to view patient data protected by the Health Insurance Portability and Accountability Act. The importance of having your own version of these documents and having the providers sign your NDA/BAA, not the other way around, cannot be overstated. This can help you sidestep future unnecessary litigation or Medicare compliance issues.
3. HIPPA-compliant tools – Any software your business uses will have to comply with federal patient privacy regulations. Luckily, there’s a wide variety of HIPPA-compliant business software on the market, and some well-known business applications, such as Dropbox, have HIPPA-compliant versions. Your payment processor must be SOC1 compliant. SOC1 is too complicated to explain here, but your Medicare attorney should be able to break it down for you.
4. Policy protects you – Set standard policies and procedures for every activity your business engages in and every task you will ask your employees to do. Make sure you have employee contracts clearly detailing employee conduct, clearly defining poor conduct, and clearly stating consequences for failing to meet those standards. Having these procedures written down will help you avoid and defend against lawsuits.
5. Don’t be your own bookkeeper – Typically, insurance companies and Medicare can take up to 90 days to reimburse for a procedure. This lethargic pay schedule results in large accounts receivable and unique tax pitfalls for healthcare businesses. A professional accountant with healthcare sector experience will help you maintain healthy cash flow and be prepared for tax season.
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