Medicolegal Issues

What Are You Worth? The Basics of Business in Health Care

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Your career has been focused on patient care—but are you selling yourself short in the process? Here’s an introduction to the practical realities of the health carebusiness (yes, it’s a business) and how you can calculate your value to your practice … and maybe negotiate better compensation.



Dana, an adult nurse practitioner, has been working for two years at a large, suburban primary care practice owned by the regional hospital system. She sees too many patients per day, never has enough time to chart properly, and is concerned by the expanding role of the medical assistants. She sees salary postings on social media and feels she is underpaid. She fantasizes about owning her own practice but would settle for making more money. She’s heard that some NPs have profit-sharing, but she’s not exactly sure what that means.

Kelsey, a PA, is looking for his first job out of school. He’s been offered a full-time, salaried position with benefits at an urgent care center, but he doesn’t know if this is a good deal for him or not. The family physicians there make $85,000 more per year than the PAs, although the roles are quite similar.


The US health care crisis is, fundamentally, a financial crisis; our system is comprised of both for-profit and not-for-profit (NFP) businesses. Every day, NPs and PAs are making decisions that affect their job satisfaction, performance, and retention. Many lack confidence in their ability to make good decisions about their salaries, because they don’t understand the business of health care.1 To survive and thrive, NPs and PAs must understand the basics of the business end.2

So, what qualifies as a business? Any commercial, retail, or professional entity that earns and spends money. It doesn’t matter if it is a for-profit or NFP organization; it can’t survive unless it makes more money than it spends. How that money is earned varies, from selling services and/or goods to receiving grants, income from interest or rentals, or government subsidies.

The major difference between a for-profit and a NFP organization is who controls the money.3 The owners of a for-profit company control the profits, which may be split among the owners or reinvested in the company. A NFP business may use its profits to provide charity care, offset losses of other programs, or invest in capital improvements (eg, new building, equipment). How the profits are to be used is outlined in the business goals or the mission statement of the entity. There are also federal and state regulations for both types of businesses; visit the Internal Revenue Service website for details (;


As a PA or NP, you generate income for your employer regardless of whether you work for a for-profit or NFP business. Your patients are billed for services rendered.

If you work for a fee-for-service or NFP practice with insurance contracts, the bill gets coded and electronically submitted for payment. Each insurer, whether private or government (ie, Medicare or Medicaid), has established what they will reimburse you for that service. The reimbursement rate is part of your contract with that insurer. Rates are determined based on your profession, licensure, geographic locale, type of facility, and the market rate. An insurance representative would be able to tell you your reimbursement rate for the most common procedure codes you use. (Your employer has this information but may or may not share it with you.) Medicare rates can be found online at

If you work for a direct-pay practice, you collect what you bill directly from the patient, often at the time of the visit. A direct-pay practice does not have insurance contracts and does not bill insurers for patients who have insurance; rather, they provide a billing statement with procedure and diagnostic codes and NPI numbers to the patient, who can submit it directly to their insurer. If the insurer accepts out-of-network providers (those with whom they have no contract), they will reimburse the patient directly.

If you work in a fee-for-service or NFP practice, you may see patients who do not have insurance or who have very high deductibles and pay cash for their services. This does not make it a direct-pay practice. Also, by law, fee-for-service and NFP practices can only have one fee schedule for the entire practice. So, you can’t charge one patient $55 for a flu shot and another patient $25. These practices can offer discounts for cash payments at the time of service, to help reduce the set fees, if they choose.

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