Learn How To Create A Budget For Your Medical Practice

In medicine, the mention of the word profit is often viewed or interpreted as a dirty word. It is as if the word does not belong in the lexicon when health care is addressed.
 Broke doctor
I argue (in the context of the private medical practice setting) that profitability is a medical practice’s responsibility for one simple reason. If the medical practice (also known as a business) doesn’t deliver profits, health care providers are unable to provide for those in need.

Why Profits?

Profits pay for infrastructure, technology, education and human resources, all of which translate to superior pediatric care when employed correctly.
Another way I like to put it is by saying,

 

…a broke doctor does do anybody any good.

 

Calling vs Profits

Indeed, our medical businesses differ from other companies in that we care for children. And the notion of withholding medical services or restricting access to a sick child merely by the patient’s parents inability to pay for health care services is simply not in a pediatrician’s DNA.
However, it is important to accept the reality that without a way for a doctor or the practice’s income to outpace expenses, health care providers are unable to provide services of any kind. At least not for the long term.

Is there a solution?

How do we reconcile these two competing issues? On one hand, it is necessary for a medical practice to deliver profits if it wants to remain sustainable. On the other, we have an intrinsic motivation to put the patient’s needs first.
I am glad you asked.
These two dichotomies can co-exist – and even flourish – alongside each other. There is indeed numerous tools and principles rooted in business that can help medical practices manage what otherwise appears to be opposing forces.

A Resource You Don’t Want to Miss

Today, I want to tell you about a resource I’ve been working on to help your office obtain financial success, while simultaneously providing unsurpassed pediatric care to your patients.

To help you succeed in your financial success, I’ve written a comprehensive eBook on budgeting that walks you through the process of creating a budget for your medical practice. The materials also cover basic principles necessary to put the exercise into perspective.

Budgeting is a major component of financial success. Moreover, financial success is essential to the continuity of care.

To read more about this offering, click on the image below.

Medical Practice Budgeting
Click on the image

I do hope that you buy the book, but more important, that you find the eBook helpful, useful and valuable.

Want To Be An Awesome Practice Manager? Learn How To Calculate This Key Performance Indicator

Revenue per encounter is an excellent barometer of your practice’s financial health. There are many things that influence the revenue per encounter and consequently allow you to see the impact of things such as:

  • Are your claims being processed timely?
  • Are your claims being paid properly?
  • Are you being paid fairly?
  • Is your payor mix excellent, fair or poor?
  • Are you following proper CPT coding guidelines?

To determine your practice’s revenue per encounter, you’ll need 2 sets of data. The first is the number for patient visits during the previous 12-months. The second set of data you’ll need is the practice’s total revenue over the same time period. With these two data sets, you can calculate how much revenue your practice generates per visit.

The formula is simple:

Revenue / Encounter = Revenue Per Encounter

If you want to get a bit sophisticated, you can break down the revenue and number of encounters by month. I recommend you go the extra mile on this one. You’ll see why in a bit.

What’s Next? Screen Shot 2015-01-09 at 6.50.29 PM

Once you have the two data sets, you want to set up a simple spreadsheet that looks similar to the image on the right.

You will notice that the Excel sheet mock-up shows monthly variation in the revenue per encounter.

There are multiple explanation for the variance, but generally, it can be explained by the ratio difference between the practice’s sick and well visits.

During the winter months, the practice sees more sick visits and less check-ups while the summer months brings well visit encounters with higher per visit revenue due to vaccines and ancillary services.

Flu season influences revenue per encounter as well. A busy or mild flu season will have an obvious impact on patient encounters.

Want to go a step further? Do the same break-down by provider, by month.

With this simple exercise, the practice is able to estimate the number of encounters and revenue on a monthly basis for the coming year. Moreover, the practice is able to predict its revenue stream in an effective manner and plan for cash outlay such as when the vaccine bills are due.


 

Thanks to the Pediatric Management Institute for providing the majority of the content for this post. 


 

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Pediatric Practice Management Seminar You Don’t Want To Miss

The content in many practice management seminars or conferences are either too generic (the one size fits all medical specialty approach) or too specific (subspecialty focused) in my view. As a result, it makes it difficult sometimes to figure out how to apply the lessons from other medical specialties to pediatrics.

If only there was pediatric specific seminar, where everybody in attendance speaks yScreen Shot 2014-11-21 at 10.10.07 AMour language (the language called Pediatrics), are aware of my specific challenges and when I receive advice, tips, suggestions or recommendations, it is provided with in the context of pediatrics. Wouldn’t that be great?

Well, our prayers have been answered.

My friends at the Pediatric Management Institute have put together an awesome line-up of speakers (Disclosure: I’m one of the speakers. But I’m not including myself among the awesome ones), presentations and case studies for a one day seminar in the San Francisco/Oakland area that you will not want to miss.

This one day seminar packs a lot of information. Here’s a glimpse of the topics that will be discussed:

  • Coding, The Basics and Beyond
  • Set Your Practice Prices Fairly and Easily
  • Brave New World: Future Pediatric Models
  • Key Performance Indicators for Pediatric Practices
  • Easy Methods to Collect Patient Balances
  • The 5 Legal Issues To Watch Out For In a Pediatric Practice
  • Top 10 Coding Lost Opportunities
  • Five Concepts to Maximize Your Marketing
  • When to Add Another Provider to Your Practice
  • ICD-10, Ready or Not!
  • Patient Recalls
  • Budgeting for a Pediatric Practice

Whether you are an expert in practice management, employed by a large health organization or just starting to learn about how to properly manage a medical office, this seminar offers a valuable learning opportunity.

But wait… there is more!

The PMI team is holding the seminar at the Holiday Inn & Suites Oakland Hotel Airport , which as the name implies, is right next to the Oakland airport. No need to rent a car or arrange for additional transportation. You’ll be right there. Fly in. Attend the seminar. Fly out.

For a PDF on the topics, speakers, location and date (Saturday January 24, 2015)  click on the link: Pediatric Management Institute Seminar

Psst…. one more thing.

If you use the code “PediatricInc” when you register, you will receive $75 off your registration. How cool is that? This offer is exclusive to PediatricInc readers. Now you can bring someone along and save $150.00. If you bring one more person, you’ll save $225.00… it’s like the gift that keeps on giving. 🙂

Register

 

#6 Learning Steps to Budget for Your Medical Practice [Practice Management VideoCast]

In this episode, Chip and I have our first guest. Paul Vanchiere was kind enough to sit down with us to talk about budgeting.

Why budgeting? Well, I suspect that this is an area where many practice don’t excel. If you are part of a larger group, the likelihood you have a sound budgeting process that is sophisticated. But for those in smaller offices, not so much.

Paul is a great guest because he has been worked in many different healthcare setting. This experience has given him a unique perspective that I find interesting.  And it so happens, he’s worked a lot on budgeting for both large and small practice.

Paul highlights 3 key issues that we ought to consider in order to properly budget for our office. The are:

  1. Capacity
  2. Payment – Revenue per encounter
  3. Expenses

Want to learn more about these 3 keys? Then watch the video.

Before you go though, let me mention a few things.

Podcast

We make the video into a podcast so that you can download it and listen to it at your leisure. The podcast goes for about an hour. Chip, Paul and I stick around and continue talking…. we sometimes leave “nuggets” of info towards the end.

You can go to iTunes, search for pediatric practice management or go to this link if you are not fond of the iTunes ecosystem. http://ppmmc.libsyn.com/episode-6-03-06-13-setting-a-practice-budget

Seminars

Paul is doing seminar in several parts of the US this year where he will address budgeting and other practice management issues. If you are interested in them, follow this link: http://www.pediatricmanagementinstitute.com/

OK, here is the video: