Medicine is a noble profession enabling you to save the lives of hundreds and thousands of people. However, it is more than just saving lives and is a huge business stream worldwide.
The global medicine market was valued at around 1.42 trillion U.S. dollars in 2022.
Yet, it can be challenging for physicians and healthcare workers to understand the business side of medicine as they obtain a degree in medicine and not a business. While it might seem unreal, most medical professionals do not know how to start working after they complete their studies.
A survey conducted with the final-year medical residents mentioned that only nine percent of the students said they were prepared for the business side of medicine. Around fifty-six percent mentioned that they did not receive any proper instructions about contracts and compensations in professional life throughout their medical studies.
That is why many medical students are unaware of the business side of medicine even when they are in their final year of residency.
Healthcare Business Models in Medicine
Healthcare has changed massively from treatment procedures to doctor-patient protocols and service models. In the past, doctors opted for an FFS model while imparting their services to patients. The FFS or Fees for Service model is based on paying the doctor for their service. On the other hand, now, healthcare service dynamics focus more on the patient’s experience than the number of patients.
Healthcare policies are focusing more on the quality of care than ever before. Providing better value to the patients also means catering to fewer patients at the same time. So, how can doctors maintain their business while delivering better patient care?
Recent Practice Models
Two new practice models have been introduced to improve patient care quality without compromising the doctor’s business.
Accountable Care Organizations (ACOs)
Accountable Care Organizations split the cost of treatment among the hospital, doctors, and other healthcare professionals. They work together to provide high-quality care to Medicare patients.
Independent Physician Associations (IPAs)
Independent Physician Associations enable healthcare providers to stay independent when benefiting from being a component of a large business. These associations help physicians connect to third parties to pursue their business without burdening the patients.
Besides the associations and organizations facilitating patient and physician relationships, many doctors prefer running an individual setup. If you also want to run an independent practice, here’s what you must take care of:
Recruit Professional Staff
Having professional and personable staff in your clinic is the most important element of running a successful healthcare setup. Your team must be qualified and trained in their respective facilities to provide the best patient service.
Utilize Advanced Technology
Providing high-quality service is nearly impossible if you do not imply advanced technologies in your independent setup. Patients also prefer consulting physicians well-versed in the latest technologies and research. Adopting the requirements of changing times allows you to manage the patient flow easily.
Patient support has become inevitable in running a successful independent healthcare facility. Gone are the times when patients were happy with any level of treatment; now, they look forward to the best as their feedback is heard and acted upon.
Components of the Business Side of Medicine
Whether you work with a healthcare association or run an independent facility, understanding the components of the business side will allow you to run it smoothly. Understanding how your decisions may lead to financial implications that affect your professional and personal life is critical. Here are the components of the business side of medicine, including the services and resources available to physicians. They may vary from region to region, but understanding these will enable you to make better, calculated decisions.
- Personal and professional planning (Incorporation, insurance, planning services, and practice management and advisory)
- Legal services (Medico-legal advice and practice advice and advisory)
- Electronic media records
- Building your practice
- Improving service delivery
What do you Need to Know Regarding the Business Side of Medicine?
Understanding the business side of medicine differentiates a great doctor from a good doctor. Residents can learn about the market trends and risks in the business to ensure they build a place in the profession soon.
So, what do you need to know about the business side of medicine?
- Learn business management and maintenance techniques, including inter-organizational communication.
- Understand what other physicians with similar specialties and credentials charge for their services.
- Learn to use balance sheets, file and maximize your business taxes, and track income, expenses, and revenue.
- Financial and business jargon literacy.
Why Understanding the Business Side of Medicine is Important?
Many people believe that healthcare is a profession solely based on the service of humankind. But, if we think that way, how will doctors live and survive in this high-cost world if they do not charge for their services?
Patients often complain that doctors do not give them enough time. While it is not the case in all healthcare facilities, many physicians are agitated with the patient flow while wanting to consult as many patients as possible during the day.
Thus Harvard Business School emphasizes the importance of understanding the business side of medicine and learning those skills to manage the costs without compromising treatment quality. Dr. Richard Pitts, vice president of clinically integrated networks, also suggests, “Paying attention to the best treatments, along with the cost of those treatments, requires both business and medical skills.”
Benefits of Understanding the Business Side of Medicine
Realizing the business side of medicine, can help keep running the facility independently or in association, meanwhile reducing overhead costs. Some of the benefits of understanding the business side of medicine include the following:
Protection from Legal Issues
When you understand the business aspect of this profession and take every step carefully, you will not have to worry about legal liabilities. Primarily when you work with an association or consult a lawyer prior to making contracts, it protects you from multiple legal and financial problems.
Understanding the latest market trends and risks and taking your next step accordingly will enable you to increase your income. Staying updated with recent technological advancements and healthcare management lets healthcare professionals maximize their expertise. When physicians understand the business side, they also ensure they charge for the value they provide. So, it saves you from undervaluing your abilities in a particular specialty.
The organization is a critical element of any business, whether you are part of a bigger entity or working on your own. Thus, you must maintain organization in all aspects of your setup, including legal matters, finances, and staff, to ensure you do not face the consequences.
The Bottom Line
Many medical students are not aware of the business side of the profession, even during residency. Being unaware of the business side of medicine restricts them from making the best of their abilities and opting for suitable options. Harvard Business School pushes students to understand the business aspect of the profession to avoid financial and legal liabilities in the long run. It also allows you to provide better value to the patients and continue to make good money while reducing overhead costs.
What is the business side of medicine that medical schools don’t teach you?
Most medical students do not know the financial and legal liabilities of setting up their facility or working with others. They are also not aware of creating contracts or reimbursements when needed.
How do you become a healthcare entrepreneur?
Becoming a healthcare entrepreneur is easy when you know the important factors to consider. The first step is to assess the needs of the patients through market research and planning accordingly. Next, you must analyze your limitations before stepping into the business. Choose the right investor and balance between profitability and quality care. Don’t forget to consider the latest technologies when setting up your healthcare facility.
What is the most profitable medical business?
Many medical businesses have emerged as profitable niches recently, including online pharmacies and medical services. Entrepreneurs are also opting for transcribing services and healthcare record management.
What is the highest-paying job in medicine?
Medical professionals are believed to make a high income; anesthesiologists are the highest paying, followed by physicians and surgeons. Next are nurse anesthetists, pediatricians, dentists, podiatrists, nursing offers, and pharmacists.
What is the best business degree for healthcare?
Many healthcare workers opt for a second degree to increase their value in the market. And if you want to become an entrepreneur, a Master of Business Administration (MBA) degree with a specialization in healthcare is the best choice. It provides you the knowledge of the business side along with your medical expertise.
How can you use a business degree in the medical field?
If you do not have a medical degree but want to enter the medical field with a business degree, you may join business operations or budgeting and forecasting. Other options include performance measurement, quality improvement, health informatics, and pharmaceutical or medical device sales.
Can I study business and medicine?
Some colleges offer Medical Doctor and Master Business Administration (MD/MBA) dual programs for professionals aspiring to become doctors while becoming a part of public health and medicine.
Matthew is a Co-Founder at BusinessFinanceArticles.org. Matthew was a floor manager at a local restaurant in Wales. He lost his job after the pandemic and took initiative to make a team and start the project.
Michael Fallquist says
Starting a business in the medical world is noble, as you mentioned here, but it can be tricky and requires extensive planning as well. Thanks for sharing these tips!