The Business Case for Hiring a Nurse Practitioner

Carolyn Buppert, MSN, JD

Disclosures

March 24, 2020

Why hire a nurse practitioner (NP)?

Carolyn Buppert, MSN, JD, Healthcare attorney

Depending on level of experience and type of certification, the NP can bring expertise, increase profits, and provide respite for a sole practitioner or small practice. Having an NP on staff can increase the choice of caregivers that some patients desire. Studies have shown that patient outcomes of care provided by NPs are comparable to those found with physician care, NP care is cost-effective, and patient satisfaction with NP care is high.

If you are thinking about hiring an NP, you may also wonder how the NP will affect the practice's bottom line. For example, how much is an NP typically paid? How much money can an NP bring in? What, exactly, can the NP do in the state where the practice is located, and will the practice be reimbursed for these services?

The basics on expenses, revenue generation, and potential profits when adding an NP to a practice are outlined below.

Calculating the Business Value of an NP

Revenue generation. A full-time NP typically will work 5 days a week, 47 weeks per year (assuming 1 week off per year for continuing education, 2 weeks of vacation, and 2 weeks of holidays). Although it depends on patient acuity, a reasonable patient load for a full-time NP might be 20 patient visits per day. An NP would be performing and billing new patient visits and established patient visits at five levels.

But let's simplify by calculating the reimbursement for an average patient visit to an NP. The math goes like this: Under the Medicare Physician Fee Schedule for 2020, Medicare reimburses a middle-level office visit with an established patient (Current Procedural Terminology code 99213) at $75.32. (Reimbursement rates vary among geographic areas.) If an NP performs the service and it is billed under the NP's name, reimbursement from Medicare and the patient copay is 85% of the Physician Fee Schedule rate. The total reimbursement to the practice would be $64.01. Multiplying 20 patients per day, 5 days a week, 47 weeks a year by $64.01 means the revenue generated by a full-time NP would be $300,847. This number is conservative and includes only the reimbursement for the evaluation and management visits. There would probably be other charges connected to the visit, for testing and earned enhancement for the performance of quality measures.

Note that reimbursement from other insurers may be higher than Medicare's. Medicare's reimbursement would be higher if the practice could comply with the rules on incident-to billing.

Employee expense. NP salaries vary by geographic region. The national average is approximately $110,000. If full benefits are offered, usually costing 25% of salary, the personnel expense would increase the salary to approximately $137,500. If the additional overhead expenses to a practice who employs an NP are $65,000 (additional space, furniture, assistants, supplies, telephone, continuing education, and so on), the full expense of employing an NP would be approximately $202,500 annually.

Potential profit. In the example above, the practice's profit would be $98,347 yearly. Profits could surpass that amount for the NP whose average reimbursement per visit is greater than $64.01, or who bills more than 20 patient visits per day.

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