The Business Basics of Audiology

By the end of 2005, about 25% of audiologists will be at the doctoral level. In contrast, in the mid 1990s, only 2 to 3% of audiologists were educated at the doctoral level. The Doctor of Audiology (Au.D.) degree has substantially upgraded the profession and the skills available to our patients. As the profession moves to the doctoral level, there are increasing opportunities for audiologists to own their own businesses and provide services as private practitioners. Although this independence is a major opportunity, there are some significant challenges that come from owning a business for which some audiologists are ill prepared.

A legacy of the profession has been a “helping professional” mentality spurred by our devotion to patients and educational orientation by well-meaning but short-sighted professors. As clinicians we were taught to help our patients by doing what was necessary to facilitate their rehabilitative treatment. The focus was, as it should be, on patients and how to best treat them to achieve better interaction with their environment, not necessarily on how audiologists were to make a living as part of the process. As clinicians, audiologists have the professional responsibility to provide the best possible care and to think of our patients' best interests before our own. This does not, however, imply the necessity to compromise our income and subsequent lifestyle to offer high-quality hearing care. If the audiology practice is simply there to “help people,” the owner is donating time and, unless independently wealthy, will soon be a destitute “helping professional.”

Consider that physicians, attorneys, and other professionals also are in “helping professions.” Physicians help people overcome health difficulties and, as part of the process of assisting their patients, may be required to “sell” their patients a follow-up office visit, special testing to determine the cause or depth of the problem, or a surgical procedure. Similarly, attorneys help their clients with legal difficulties and as part of the process, it is often necessary to “sell” their clients legal services or representation in court. Audiologists also are providing valuable services by either diagnosing hearing difficulties or providing rehabilitative treatment and/or appropriate products to the hearing-impaired patient.

Most audiologists are good clinicians, constantly seeking techniques and technologies that will meet the needs of their patients. In private practice or as the manager of a profit center in a larger entity, it is not enough to be a good clinician. When the promotion to Director comes or the doors of a practice open, the audiologist becomes a manager and, as a result, a business person. Audiologists and other clinical people are commonly criticized by employers, manufacturers, insurance companies, bankers, accountants, and other business professionals as naive and inexperienced regarding the perils and/or promises of private business. Ultimately, every audiology practice becomes a business that must be managed effectively so that the practice can survive over the long term to serve the patients and, of course, to support the lifestyle to which the audiologist aspires. As the profession becomes practitioner based, management challenges will occur each day as part of this new responsibility.

To that end, this issue of Seminars in Hearing is dedicated to providing a primer on audiology practice management topics. Its purpose is not to be an exhaustive compilation of information on business management, but to be a place to begin the quest for information, providing some of the basics that are built upon by comprehensive textbooks in audiology practice management and general business.

Most practices will eventually have employees. Some of these employees will be professional colleagues, while others will be clerical staff; some will be hourly and some salaried. In the first chapter, Dennis Burrows presents his experience in managing employees, discussing specific legalities and business procedures in the area of human resources. His article, “Human Resource Issues: Managing, Hiring, Firing, and Evaluating Employees,” also includes a cursory review of many of the laws involved in human resources and presents a good case for the use of an employee handbook in the audiology practice.

Once you have your clinic and your personnel organized, the next order of business is to get paid. Currently, audiologists are at the mercy of a system that was designed for physician reimbursement and not for audiologists or other nonphysician specialties. Although this can be one of the real complexities of practice, Robert Fifer, one of the country's leading authorities on coding and reimbursement, presents his contribution to this issue, “Coding and Reimbursement: A Tutorial,” that offers fundamental information on how clinics actually get paid for services. The material in his article orients the reader toward how and when to use specific CPT and ICD-9 codes to insure speedy payment for services. This article is simply the beginning of a continuing evolution of these codes and the audiology manager's knowledge of them.

One of the reasons to study audiology is that accounting is not part of the curriculum. A significant challenge to clinicians in practice management is how to review balance sheets, income statements, and cash flow statements as well as understanding how to use this information by figuring accounting ratios and tracking them. The article “Basics of Accounting for Audiologists” offers a simple orientation to financial statements and the computation of ratios to track the progress of the practice. This material, as in the other articles, is meant to be a foundation for further study in this area through business courses, experience, and/or more detailed reading.

Once you have a healthy practice it is necessary to market your services to the community. Marketing is an important topic to practice management, especially now when we compete against the most formidable competitor of all, ourselves. In the past, we did not need to know too much about marketing or the marketing mix, as we simply put an ad in the newspaper once in a while. As we move to marketing against our colleagues, only those with the best fundamentals can build the knowledge necessary to insure success. In “The Basics of Marketing for Audiologists,” the goal is, again, to engage readers with basic fundamentals and refer them to more detailed information on the topic.

Legalities of private practice are of general concern currently and will become an even greater issue in the next few years. There are many myths as to what is legal and what is not in our profession and it is essential for audiologists to know these legalities. A fundamental orientation to the legal specifics of malpractice and conflicts of interest are included in “The Law and Audiology Practice: Understanding Malpractice and Conflict of Interest Rules.” This article is written by one of the country's foremost authorities on ethics, malpractice, and general legal issues in health care, Bryan Liang. From his perspective as a physician, an academician, and an attorney, Dr. Liang covers the basics of the law and audiology practice. He uses a unique style relying on scenarios to describe the specifics of what is legal and what is not and offers some “gray areas” unique to the field of audiology. As with the other articles, this is a basic orientation to the law as it applies to the practice of audiology. Of course, for specific situations and deeper discussion of their legal implications, it is wise to consult an attorney.

As with any valuable asset, there is a time in the life cycle of a practice when it will be necessary to have it appraised. Although appraisals are essential when practices are bought or sold, value assessments may be necessary for other reasons, such as loans, divorces, and other special situations. Randall Drullinger has appraised over 150 practices across the United States and offers the basics of how values are put on these businesses. His article, “Practice Valuation: The Buying and Selling of an Audiology Practice,” gives a short, simple orientation to how practices are appraised and the purchase/sale process. It is, again, a basic overview of the procedures involved and is designed to be a first exposure to the process.

Since my 1998 appointment in the University of Florida Working Professional Doctor of Audiology Program as Adjunct Professor, I have spent considerable time reviewing my business practices and learning better management techniques. In the beginning, it was a difficult task as there was not much audiology practice management information and my skills were crude. As reading and studying in business helped my skills to develop, I found that the world of private practice offers possibilities for a freedom of schedule to enjoy life at a level to which most audiologists aspire. As simply the leader of this great team that has dedicated its time to the preparation of this issue of Seminars in Hearing, I hope that it assists readers in moving from the basics to textbooks, courses, and other more detailed experiences that will lead to the efficient management of their practice.