Money Management 101 – What Every Private Practice Dietitian Needs to Know
Attention dietitian: This resource contains affiliate links to products. The Reimbursement Dietitian may receive a commission for purchases made through these links.
It is amazing. After years (AND years!) of being in school I find it so striking that in all of those years it took to become a dietitian – SO little time was spent learning how to run a business. I think maybe at some point I needed to take an ‘economics’ class – but the reality is as a dietitian we have very little formal training in business or management of any type.
However, that needs to change. In order to be a successful private practice dietitian, you need to start thinking, breathing, and acting as a businesswoman NOW. Like asap! Your bottom line needs to become a priority and I am here to help you develop the skill set to do that.
put your businesswoman hat on
After years of running a successful nutrition private practice, I feel like I honestly have a solid sense of the key business concepts you need to master when starting your own practice. In this blog, I want to share with you what I might consider the non-negotiables when it comes to being a private practice dietitian and your business. These key actions will determine your long-term success as a business owner and a private practice dietitian. If you skip past any of these key actions the financial health of your private practice will suffer.
Let’s start by identifying what you need to do NOW in order to be successful in BOTH the long and short run of your business:
- Determine your fees/package structure
- Decide whether or not you will be accepting insurance
- Determine your office policies
- Open a business bank account
- Get a Business Credit Card
- Get a Merchant Account
- Carefully track your expenses
- Receipts, Receipts, Receipts
- Get yourself an accountant preferably a CPA
1. Determine your fees/package structure
Before you open up shop you want to make sure you have your services and rates clearly defined. That is not to say you can’t change them as your practice evolves. But generally speaking one of the first things people are going to want to know (aside from how soon can they get an appointment with you!) is what the visit (s) cost as well as what it/they include.
Even if you decide to pursue the route of accepting insurance. You are still going to run into people who from time to time who don’t have nutritional counseling with a registered dietitian on their policy. Therefore, even when you start accepting health insurance you will patients who are private pay and will need access to your rates.
Therefore, while determining your rates is a whole conversation in and of itself – before you even start promoting your business sit down and clearly define your services and fees. That way when opportunity knocks – you will be ready to rock and roll being the savvy dietitian that you are 🙂
To post your fees or noT? The age-old question.
I strongly believe being transparent with your rates and package fees is really super-duper important. By having your rates readily available there is no question about what you are charging for your services. By being straightforward and clear, people know right away whether or not they can afford your services. This allows you to protect your most valuable asset; your precious time.
2. Decide whether or not you will be accepting Insurance
There is a whole section in this ‘Resources’ section on being a dietitian who accepts health insurance. I feel like I could talk for days about health insurance. However, at the end of the day, you need to decide whether or not it is worth it for your practice.
The process of getting credentialed as a dietitian can be pretty overwhelming. But, that does not mean it is impossible. It just means it requires a good deal of dedication and fortitude.
I run an EPIC group reimbursement coaching program that teaches dietitians how to get credentialed, bill the shit out of insurance, and make the money they deserve. Click HERE to learn more about this kick-ass program.
Unfortunately, the process is not entirely linear. Meaning it is not as easy as just submitting an application and then waiting to be credentialed. That is certainly part of it – but not all of it.
Each insurance company has its own set of procedures. While most are fairly universal the process of getting credentialed can take anywhere from 3 – 12 months. That is why I strongly encourage you to create your rates/fees/packages before you open your practice. Therefore, while you are getting credentialed as a dietitian you can still see “private pay” or essentially fee for service patients. Then as you get credentialed with various insurance companies you can then diversify your offerings to include both private pay and health insurance based sessions.
Is your market saturated?
Also, keep in mind depending upon what other dietitians are practicing in your area – some insurance companies may not be taking on new dietitians to participate in their network. They may say that your particular area (generally a 20-mile radius) already has ‘enough’ dietitians according to their standards.
I would encourage you to do your research if you run into this issue. Review their directory and see which dietitians are credentialed with the insurance company. If your search comes up with very few actual dietitians in your particular area. Then I would write a letter of appeal directly to the insurance company supporting your reasoning for the insurance company to consider credentialing you.
I don’t tell you all this to scare you. I just want you to be a fully informed private practice dietitian when determining whether or not you want to pursue working with insurance companies. For about the last ten years I have been credentialed with all the insurance companies in Connecticut whose network is open to dietitians in my area. It has not been all rainbows and unicorns for sure! But at the end of the day, I would say that 95 percent of all the patients we see in our group practice use their insurance benefit. So needless to say; private health insurance is my biggest payer.
no biggie either way
Also, keep in mind just because you are a dietitian – you don’t have to take health insurance. You can try your luck at just having patients pay outright for your services. Then if you decide down the road you want to try your luck with getting credentialed and accepting insurance – you certainly can do that. There is nothing that says you need to start taking insurance as soon as you open your practice. I just list this at the top of my list of money management as accepting insurance in your practice can be a HUGE financial moneymaker for YOU!
3. Determine your office policies
You want to be highly specific when it comes to your office policies. I have written about the importance of this many times. But I can’t stress this factor enough. The more time and effort you take into creating crystal clear office policies, the less hassle and aggravation you will experience as a private practice dietitian.
Below are things you will need to address in your policies as it relates to money:
- How do you plan to collect payment?
- At the time of service?
- Payment plans?
- By invoice?
- What forms of payment will you accept?
- What action you will take on past due accounts?
- What is the fee for returned checks?
- What is your policy on cancellations?
- Is there a time frame they must cancel within to avoid being charged?
- Will there be allowable exceptions?
- What is your policy on “no shows”?
- Will you have your patients verify their health insurance benefits on their own? Or will you call for them?
- What is your policy for patients who have out of network insurance?
- Do they need to pay at the time of service?
- Will you submit a CMS 1500 form on their behalf?
- Or will you provide them with a superbill and have them seek reimbursement on their own?
- How will you collect co-pays?
- At the time of service?
- Prior to the appoinment?
- After you have submited the claim, received the EOB and determined if the co-pay was actually required?
- Will you require the patient provides you with a credit card to secure their initial visit?
I know this may seem like a lot of information to address in your office policies but the more direct you are – the better. I would also highly suggest having your patients sign off they received them. I would then make a copy for the patient and file one in their folder. Here is a link to my office policies and HIPPA waiver from one of my websites.
4. Open a Business Bank Account
It’s a good idea to have a separate bank account for your business no matter how you formed your private practice. A separate account makes it possible to keep track of your personal and business funds individually. However, if you incorporated your business or formed a LLC, a separate account is a necessity.
I highly suggest having separate accounts for your personal and business account BUT with the same bank. This makes things so much easier if you need to jockey around money between your accounts. While as an LLC you cannot commingle your expenses – you can still transfer money legally among your accounts. Also by having separate accounts with the same bank it makes it easy to see your true income. If you are both employed and self-employed your bank account will often show two very different stories.
For example – I have several accounts with Bank of America. Two worth noting are my personal checking and my business checking. My money earned from teaching goes into my personal account, while all of the monies received from my nutrition private practice go into my business checking account.
This is super important (because of my teaching status as an employee) my take-home pay is pre-taxed. Therefore, the money in my personal checking is all mine. However, this is not the case with my business checking account.
My income from my practice isn’t taxed prior to it being deposited. I instead pay taxes on my practice’s earnings on a quarterly basis. Therefore, the money in my account is not always mine. This is because I still owe taxes on that money to the government.
So it can be deceiving when you view the money in your accounts. You may think you are big pimpin’. However, a good portion of the money in my business account disappears when I go to make my quarterly tax payments.
Savings Account or Tax Account
Your private practice income is always subject to state and federal income tax. Therefore, in addition to having a separate business checking account, I would suggest having savings account linked to your business account that essentially serves as a tax account. Each month I would suggest looking at your ‘total deposits’ and then transferring enough money to cover your estimated quarterly payments.
How much should you put aside each month for taxes? Well, it really depends on what tax bracket you fall into. That is totally dictated by how much you (and your spouse) make collectively. When I say collectively
Curious to how tax brackets work? Here are the federal income tax brackets for 2020.
5. Get a Business Credit Card
Just like a separate bank account, using a business-specific credit card not only makes record-keeping easier, it can ensure that you maintain the “corporate veil” that protects your personal assets—one of the key benefits of having an LLC or incorporation. I know this sounds like a no-brainer (especially because YOU are a smarty-pants dietitian) but be sure you use your personal credit card for personal expenses and your business card for business expenses.
Not only am I a private practice dietitian – I am also a travel junkie. This means I love me some points. In fact, Marc and I go on at least one ‘free’ trip each year just using our points.
Therefore, it is no surprise I have a handful of American Express cards. Between the sign-on bonuses, retail offers, and ease of earning and combining points Amex makes it easy to accrue a big old pile of points. To the right above is a picture of me chillin’ in my business class seat (thanks to points) on Emirates to Greece in October 2019. All because I was a boss about how I expensed my purchases.
I have two personal Amex’s: The Platinum Card & The Everyday Card and one business card the Blue Business Plus Card. I always keep my business and personal transactions separate. However, Amex allows me to combine my points.
The Reimbursement Dietitian Tip
If you love to travel (especially for free) and earn points don’t hesitate to use my affiliate link to check out all the cool stuff Amex has to offer. We can both get rewarded if you’re approved!
6. Get a Merchant Account
In today’s business world, so many transactions are conducted online. I would highly recommend making payments as convenient as possible for your clients by opening an account with a credit services company as a merchant.
This way, your clients both online and off can conveniently make payments via credit card. Not only will it be easier for them, but it will also be faster for you since you won’t have to wait for checks to be written, processed, and mailed.
In my practice, in order for anyone to be able to make an appointment, I require a credit card on file. It is also my rule that services such as metabolism testing require a deposit. By having the ability to accept payments online through my website I am able to streamline the whole payment process. I cannot tell you how much this simple process has increased the efficiency of my practice.
Currently, I use the merchant service Square. It is user friendly and can be integrated into most online shopping cart platforms. The credit card scanner plugs directly into the headset plug on your iPhone, so you can collect payments at the time of the service.
Generally, each time you swipe a client’s credit card there is an associated fee. For example with Square, it is 2.75 %. So say you run someone’s card for $100 – this means that only $97.25 will be deposited into your bank account after Square collects their fees. It, therefore, costs you $2.75 to use the service.
There are numerous merchant account options available to small business owners like you. I would first check with your current bank and see if they offer merchant services. If you are a loyal customer they may give you a break on your rates. Then, shop around and see what other companies are offering for rates.
Here is a list of 7 different popular merchant accounts and their respective rates.
Merchant fees are generally considered a business expense for dietitians in private practice. To learn more about the common business expenses you may be eligible to claim on your tax return click HERE.
7. Carefully Track your Expenses
When I first started in private practice I would have liked to consider myself a fairly organized person when it came to being prepared for my taxes. After all, I am a typical dietitian – full on Type A personality! I kept a neat little spreadsheet with my expenses, saved my credit card statements, carefully recorded my income by pulling it from my bank deposits and paid my quarterly taxes on time.
However, after getting randomly audited for my 2015 AND 2016 taxes I felt anything but organized. Despite being what I thought was prepared – the IRS taught me otherwise. Therefore, from someone who can speak first hand of just how horrible an IRS audit can truly be – I strongly encourage to make it a priority on carefully tracking your expenses (and your income).
According to the IRS to be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is would be considered common in our field. While a necessary expense is one that is helpful and appropriate for a nutrition private practice. An expense does not have to be indispensable to be considered necessary.
Curious what is considered a legitimate business expense? Click here to read more about the details of what can be expensed as a deduction on your taxes.
record your expenses at least once per month
What I would suggest doing is to sit down monthly and carefully examine and record your expenses and income. On the 16th of each month – no matter what day it falls on I hold myself accountable to doing my expenses. The reason why I choose the 16th is that it is long enough after my accounts have closed for the month prior and by then I have all my statements.
You can do this in manner you see fit. You might choose just to use a good old-fashion pen & paper, an Excel spreadsheet or one of the various accounting software platforms. The IRS does not care how you record your expenses as long as you keep detailed records, receipts and invoices.
As of 2019 I started using Intuit for QuickBooks, which is a cloud-based software program. I opted for the annual fee (versus paying monthly) and I believe I paid a little over $200 for the entire year. I have to admit while the software is fairly user friendly – I am still struggling with some of the features.
However, don’t feel like you need a fancy program like QuickBooks when you first open your practice and your expenses are likely relatively low. Just make sure no matter what approach you decide you keep the following in mind:
8. Receipts, receipts, receipts
Keep EVERY. SINGLE. FRIGGIN’ receipt. No matter how little the expense – if you are going to claim it as a deduction the IRS requires you have the receipt to support the expense.
I use a coupon binder and file receipts by month. This makes them easily to access and I can line them up against by business credit card purchases.
This one was a little new to me. The IRS wants you save each and every invoice for any service you may have utilized as an expense. For example, if you pay Go Daddy monthly for web hosting in the event of an audit you will need to produce the monthly invoice. The same goes for things like your scheduling service, business cell phone, and billing services. Even if the charge on your business credit card is self-evident that it is a business expense – the IRS still requires you to have an invoice so they can directly tie it back to your particular business.
Therefore, while I know it is extremely bad for the environment – ALWAYS request paper statements whenever possible. Also if you receive electronic invoices print them almost immediately when you receive them. This way you will not need to be scrambling to obtain the invoices – you will already have them neatly organized ready to go.
10. Get yourself an accountant preferably a CPA
It is important to work with an accountant who is familiar with small businesses.
Even though Marc’s dad is an accountant – we chose to have H & R Block do our taxes once we got married. Marc is solely self-employed; while I am primarily self-employed and partially employed as a college instructor. Therefore, our taxes are more complicated than the average person who is just an employee.
While H & R Block was decent – they were far from perfect and we ran into A LOT of issues not only doing our taxes but also during the audit. Therefore, while for most people they may be fine – they were not fine for us given our particular situation.
Therefore, while I am not saying to avoid big-chain accountant firms; I just think you may be better off asking around or surveying other small business owners in your area on who they use.
Having a good accountant or CPA is critical. Not only can they help make sure you are deducting all the possible expenses related to your business. They can also make sure based on your income and liabilities you are properly set up legally as either a sole proprietor, LLC, partnership or S Corporation [link to: Setting up your private practice – Sole prop, LLC, Coporation]. Don’t skimp in this area. Pay someone who knows what they are doing to do your taxes. Don’t guess!
Trust me. I know right now you are excited and want to jump right into marketing your services and seeing patients so you can increase your bottom line. But pinky-swear you will follow my guidance and put the systems we just talked about in place before you even consider seeing your first patient.
I know the money management component of running a nutrition private practice and being a dietitian is the least sexy part of our job. However, I can assure you that if you take the time and energy to develop the business strategies outlined here you will be high-fiving yourself all daylong.