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.

11 Straightforward And Practical Tips To Improve Your Practice’s Bottom Line

It is our responsibility as captains of our ships, however, to equip our practices and our staff members with the necessary tools and information if we want to have any chance of overcoming these real threats.

You do not have to be a marine captain to know that there are countless potential dangers navigating waters.

With a little imagination you know there are many risks. Some hidden, like currents, while others are painfully apparent (i.e. howling winds, waves and torrential storms).


Compass Direction GuideWe know there isn’t anything the captain can do to eliminate weather conditions or enforce her will on ocean currents.

However, we can all agree the captain has control over the vessel. We can also agree that the captain has the responsibility to equip the ship and its crew member to its maximum potential if they have any intention of overcoming environmental threats.

Running a “profitable” practice is indeed becoming more of a challenge. For many, it is uncharted territory. And while there are many extrinsic reasons – like decreasing insurance payments, high deductible plans, and the increased cost of providing care – that are contributing towards the “remaining profitable” challenge, the truth is, there is little – if anything – we can do to eliminate those threats.

It is our responsibility as captains of our ships, however, to equip our practices and our staff members with the necessary tools and information if we want to have any chance of overcoming these real threats.

Below are 11 STRAIGHTFORWARD and practical tips you can implement immediately to help you navigate these rough waters.

  1. Review fee schedules regularly to ensure your fees reflect market conditions in your region.
  2. Adjust fee schedules for certain procedures to improve providers’ competitiveness.
  3. Review all E&M charges by a certified coder before submitting claims.
  4. Hire coding consultants for annual chart reviews to ensure accurate coding.
  5. Monitor and report payments of your top insurance-payers.
  6. Run reports to understand payments by different networks or other contract types.
  7. Renegotiating (or consider dropping) contracts with payers who have low payments.
  8. Monitor how long it takes for charges to be entered and claims to be submitted to make sure claims are being filed timely.
  9. Consider provider training or implement random audits to ensure billing slips are completed clearly and accurately.
  10. Review your practice’s policies for routing super-bills to ensure claim submissions are sent as soon as possible.
  11. Implement processes so your billing staff works missing super-bills, claims, denials, consistently.

Imagine for a moment navigating open waters without navigation tools. Now, imagine what would happen if conditions were less than excellent?

If your boat ran off course or worse, capsized, would you blame the environmental conditions? Or would you take responsibility because you didn’t have the proper equipment and tools to navigate in challenging conditions?

Is Your Company’s Culture Hindering Your Profitability?

1-IMG_0089I come from a non-medical business world where most conversation centers around profit, revenue, budgets, marketing, sales and things like that.

In the private  practice world, mentioning profit or revenue is almost prohibited as if it was a kind of taboo.

I remember being a little taken aback when people in the healthcare business would talk about “profit” and they would lower their voices and look around and whisper the words “making money” to ensure nobody outside of our conversation heard the money reference.

In our practice, we take a completely different approach. In our practice, we don’t apologize for our pursuit of profitability.

We are very upfront with both patients and our staff about the need to be profitable.

We view “profitability” as a responsibility.

Why? Because a broke doctor doesn’t do anybody any good.

Profitability allows the practice to hire the best docs, hire the best staff, buy the best equipment, send staff to training, pay for docs’ CME’s and all the other things that go along with ensuring patients receive the best medical care possible.

Top notch medical care is expensive.

We believe so strong in this, that in our practice, we discuss profitability in practice’s core values document. Here is an excerpt from our company’s charter:

In order to carry out our mission, we recognize that every staff member must take every opportunity to decrease cost, to increase efficiency, and earn revenues that support our team, our practice and our patients.

In today’s health care climate,  practice employee must be comfortable with talking about money. They need to know that not only is it okay, but a necessity.

Thus, I suggest it is important to “bake” revenue into the culture of the practice.

Fundamentally, this approach sets the expectation. Employees understand that collecting copayments and balances at the time of service is vital to the practice’s mission.

By openly talking about money,  employees understand that the money that comes in to the practice isn’t the doctor’s money, but it is everybody’s money. Collecting from both insurance companies and parents is where the practice gets the money to pay everybody’s salary.

In primary care, this is even more critical because we are in a low margin, high volume business.

And it isn’t just collections. Keeping down cost an unnecessary expenses is just as important. In pediatrics, for example, drawing up vaccines incorrectly, dropping a dose on the floor or simply keeping poor inventory can make the difference between profitability and loss.

Want to avoid revenue leaks an increase profitability? Start talking about money.

Embed it into the practice’s culture.

Please don’t misunderstand me with this point. I’m not suggesting that we only think about money. That is not what I’m suggesting. After all, we are still healthcare providers and things like empathy, caring, understanding, healing, compassion and sacrifice are all part of what we do day to day.

But what I am saying is that if there isn’t enough “margin” docs and their staff won’t be around to be empathetic, caring, compassionate and heal patients. In other words, we can’t help people in need if the practice is also in need.

#12 How Do You Know When To Hire Your Next Physician? [Pediatric Practice Management MediaCast]

Recently, Chip and I saw a question posted on the SOAPM listserve that addressed this notion of when is it the right time to bring on a physician. We thought it was a great discussion topic so we decided to dedicate an entire episode surrounding some of things one ought to consider when bringing on a new doc. To give you a heads up, below you’ll find part of the email that was submitted to the listserve.

I recently interviewed a potential MD candidate. She looks fine on paper and was nice enough in the interview. But how do you know if someone is going to be right for your practice? My practice is small so bringing in a bad apple would cause a huge problem. Plus, she is the only person I have interviewed. I would love to have more choices from which to select. How does everyone else go about recruiting? I can’t exactly run a want ad in the local paper…

…since I have never done this before nor have I ever been solicited by a practice for employment, how do I structure a new MD package? Salary vs production? Salary for a while and then production? At what point? And how much? What benefits? How specific do I outline work hours, call duties, etc? What happens if I can’t stand the person I hire after 3 months?

Finally, how do I even know if my practice is ready to bring in another MD? What numbers do you look at? Perhaps I should just get a scribe and bust my butt for the next 6-12 months to see if I can absorb the patient load myself without adding someone else right away?

We hope you enjoy this episode and remember, give us feedback.  Positive or negative. We don’t care (well, actually we do care). We’d love to hear from you.

Here are ways you can catch the episode. Enjoy!

Pediatric Practice Management MediaCast


Google+ PPMM Community Page

How Many Billers Should A Medical Practice Employ?

med-billing-and-codingWe’ve talked about in-house billing vs outside billing before. I even teamed up with my friend Chip Hart and devoted a full podcast to the topic. But we’ve never talked about billing staff ratios. How many billing staff should we have? How do we know if we are understaffed or overstaff?

Should we calculate the ratio based on charges and collections or should we base it on physician count?

Dr. Suzanne Berman, one of the many outstanding contributors to the SOAPM list serve and an avid supporter of the Survivor Pediatrics Blogs, jumped in to the discussion with excellent insight on how she staffs her office. Here is what she had to say.

One full-time biller could probably do 65% of our 5-provider practice. This would essentially involve simple in-and-out: convert all the superbills to claims, send ’em out, then post whatever she gets back, and send a bunch of statements, then deposit whatever we get.

A colleague of mine (who probably thinks I’m overstaffed) does just this very thing with a single part-time biller.

This physician is happy to collect 65% of his claims with hardly any effort and write off the rest — which also gives him hardly any days in AR (“oops, they didn’t pay for imms with an EPSDT? OK, I guess we’re writing that off. Next claim!”)

65% is the easy low-hanging fruit. Another FTE might do another 20% — but it’s the next hardest 20% (appeals, corrected claims, etc.) which require more skill. Another FTE will do the very hardest 10%. This gets us to 95% of collections, or so.

Then I have to decide if another FTE could get me 2-3% more collections, and is it worth it, and (perhaps most importantly) does that newly-added FTE have the skill set to squeeze out that very-difficult-to-get 2-3%? If I add another FTE, it needs to be a Claims Commando, not a “worker bee” whose main skill is being fast and accurate entering data on a 10-key

I’d like to jump in here and add that I think there needs to be a person in charge of working the patient balances. This is the person that is calling patients informing them of their balance, explaining to them why they have a balance, writing and sending collection letters and setting patients up on payment plans.

Dr. Berman brought up another very important point that one must consider when deciding how many “billers” an office should have. She writes:

The other related question is: who’s a biller? I know this sounds dumb, but a lot of the important billing functions revolve heavily on the front desk doing their job (at least, that’s how the work is divided up in my office):

  • validating insurance for each and every visit
  • collecting copays
  • getting correct addresses, phone numbers, email addresses, etc.
  • updating VFC status
  • figuring out which of the divorced parents is supposed to be paying

If you have receptionists who are not doing these jobs consistently, more work is going to devolve to the billing office to track down this information when the patient isn’t in the office. On the other hand, if you have an extra receptionist up front who does all the insurance validation the day before and runs a list of people coming in who need to be squeezed for $$, you can get by with fewer billing people. Or should I say, “billing” people. I think billing + reception = a constant (when it comes to total collections effectiveness, that is.)

Dr. Berman doesn’t answer the question, but with her approach, she is teaching us how to fish, as opposed to simply giving us the fish. I like this approach better.

But for those of you that don’t have the patiences, time or interest, I have something for you too. My friend Chip Hart also chimed in and he summarized it like this:

I usually expect at least 2:1.

Professionally I know Chip enough to know that with this statement, he isn’t saying this is a set in stone, hard-rule type statement. So don’t misinterpret his simple statement. He acknowledges that every office is different, different factors affect different things in an office. But if you want a hard rule of thumb, then the 2:1 (2 docs for every 1 biller), is a good start.

How many billers do you have in your office? What do you think is the right number? How many is too many? Does more billers equal better collections for your office? Drop a line. I’d love to learn from you too.

Has Your Medical Practice Lost Its Empathy? Here Is How To Regain It


Empathy, of course, is an important part of what we do. Right? I mean, how else could we restore health, help children reach their full potential and cure them if it is not with some sort of empathy?

In my last post, I talked about how empathy was part of our practice’s core values but that from time to time, we forget to have it.

We start out with it, but we either get comfortable, annoyed, caught up in the day-to-day that we tend to forget why we do what we do in the first. place.

So how do we regain the empathy we once had?

Joanna, my better half, wanted to re-ignite our empathy at our practice. But she didn’t just want to preach it. She wanted something more practical that would resonate with our team members.

She gave each of our 10 employees (including the 2 other providers), a question to answer. Here is small sample of some of the questions.

  • Think about how you would feel if your child’s teacher calls you in because she want to talk to you about YOUR child without knowing what it is about. Describe to us what would go through your mind in the hours leading up to the meeting.
  • Think about the time you were up all night. Now think about how you felt the morning after. Did you feel good, ready to take on the world? Where you in a peppy mood? Or were you a little more irritated than usual, moody and with less patiences? Share with us your feelings.
  • Think about the time when close family member was waiting for potentially unpleasant news, like results on a biopsy or a MRI. Describe to us your feelings, your mood, your thoughts or what came to mind during the time you were waiting to get the news. How did you feel? What made the wait worse?
  • Think about the a time you were in a restaurant, and you sat at your table for more than a reasonable amount of time without the server coming over to check on you, take your order, give you the daily specials or acknowledge your presence in any kind of way. What goes through your mind when something like that happens? 

Each person was asked to respond to their own question and to give us their thoughts. Joanna didn’t let them off the hook easy. She probed and asked follow up questions in an effort to unpack each person’s feelings. All staff members expressed words like scared, anxious, nervous, apprehensive, uneasy, tired, moody, bored, and impatience, among many, many other adjectives.

Once we went around the room, Joanna started to make the connection. She emphasized that parents that come to see us are in similar situations as the one she asked them to respond to and as a result, have the same feelings the employees described. She also explained that in places where we are not comfortable, we tend to become more anxious, moody, nervous and sometimes angry.

Add to that insomnia or poor sleeping habits, and it is easy to see why people act the way they do. The problem is that our work environment doesn’t give us those types of feelings, thus we have to remind ourselves that for parents, our office is one of those unfamiliar, not-know-what-to-expect kind of places.

More often than not, as people that work day in and day out in a medical environment, we forget that for the parents we serve, our practice is a place of uncertainty. It is a place where we can potentially give bad news.

This is place where even a well-visist, which is supposed to be a good thing, can be an anxiety filled experience. And for parents, the fear of the unknown can be disarming.

And yes, moms (and dads) may not be on their best behavior when they arrive for their am appointment, but we should perhaps give her the benefit of the doubt and remember she was probably up all night and not in the peppiest of moods.

By the way, I’m not suggesting that we excuse foul language, insults, disrespect or anything along those lines. That type of behavior us unacceptable regardless of a parent’s state of mind.

Over the years, people have defined the word empathy differently. According to a Wikipedia article, the definition ranges from caring for other people and having a desire to help them, to experiencing emotions that match another person’s emotions, to knowing what the other person is thinking or feeling, to blurring the line between self and others.

Regardless of which definition you identify with, I think we should stive to find ways not to lose it. Joanna’s exercise  is just one example. For us, it worked. The exercise brought us back on point. For you, however, it might be something else.

That’s fine. But find it and keep it. Because sooner or later, empathy is going to be so rare, that patients will think it is a super power.

I’d love to hear what your thoughts are regarding this. Do you think that this is a worthwhile effort for your practice? Do you agree with me or disagree. If you do disagree, tell me why.

Part I: Ditching Your EMR For a New One? Here’s How To Prepare

As many of you know, EMRs have been around for some time. Although I wouldn’t go as far as to say they have matured as a product, there have been some progress in terms functionality (notice I didn’t say innovation).

The new word around the block is that apparently, practices are leaving their old EMR for new shinier ones. Now, some people say that moving from one EMR to another EMR is actually harder than moving from paper charts to an EMR. I find that hard to believe, but hey, what do I know.

Regardless, moving from one system to another is always a challenge and one that very few of us have actually gone through. So, let’s say you are planning to ditch your old EMR, what are the things you need to think about in order to start going down this huge transition?

Chip Hart from Physician Computer Company (my new vendor by the way), sat down with me recently and gave me the scoop on how, based on his experience of doing several conversions, is the best way to go about this monumental task.   It’s worth noting that they weren’t all conversions to PCC.  Chip tells me they’ve had plenty of people switch from one EHR to another and not PCC.

Chip, what is the biggest thing I need to be concerned about when taking on an EMR transition?

Data conversion. How will your data move from EHR1 to EHR2? This issue is, by far, the biggest obstacle in the process of transferring from one EHR to another.

Really? But it is all data isn’t it? Transfering 1s and 0s from one file to another should be easy and quick, is it not?

Any vendor who makes promises about what data can be transferred between the systems without analyzing your actual data is just guessing. Every EHR is different and often very different from practice to practice. Experience with a particular conversion is great, but not a guarantee. Many EHR vendors can’t even transfer data from one of their own systems!

OK, what is the second biggest concern that we need to consider?

You will likely need to manage a three-way balance of timing, cost, and quality for both vendors.

Whew, sound like a lot of work. OK, in your experience, what would an ideal EMR conversion look like?

In an ideal circumstance, an EHR conversion would work as follows:

  1. Comprehensive data from EHR1 is transferred to EHR2 well in advance of the transition to EHR2
  2. Over a matter of weeks the quality of the data transfer to EHR2 is reviewed by your office. Confirm everything from discrete data points like vitals to the transfer of scanned images to your narrative/notes.
  3. Then, on the last day actively putting data into EHR1, repeat the data transfer so that your database is as up-to-date as possible.

On paper this seems pretty smooth, but I know that in practice this isn’t always the case. What are some of the hurdles that come up during this process?

Sometimes, your relationship with EHR1 has deteriorated to the point that access to the database is limited. Additionally, many EHR companies restrict database access or export in their agreements with you. Their reasoning should be obvious, be prepared to fight for your data.

Let’s say my relationship with my old vendor is good. Anything I need to be aware of still?

If the relationship with EHR1 is good, and they are capable of delivering data to EHR2 in a timely and consistent manner, it is perfectly reasonable for them to charge for this service. The range of reasonable charges can be quite broad based on a variety of technical factors, but note that the amount of effort by EHR1 is not usually tied to the size of the practice or volume of the data…so a greater charge for a larger practice usually reflects EHR1’s expectation that a larger practice can afford to pay more.

Anything else?

As noted, make sure that TIMING is a part of any discussion you have relating to data conversions. Some vendors will take 2 to 3 to 6 weeks (or more!) to deliver data to you, the effective of which on a transfer can be devastating. Sometimes, it can take a few days to then convert the data – if you come with 800GB of images, you can’t transfer that in 15 minutes. [Future PediatricInc.com readers will laugh at that comment.]


For my next post, I will posting Chip’s comments on how to leverage what we already know (as seasoned EMR users), to make the transition into the new EMR a successful one.

Chip Hart is Physician’s Computer Company Director of Pediatric Solutions at Physician’s Computer Company and he blogs at Confessions of a Pediatric Consultant. Chip also contributes from time to time to PediatricInc. To read Chip’s previous contributions, click here.

Lastly, I’d also like to point out that these are the types of discussions that we have on SOAPM, which is the Section of Administration and Practice Management at the AAP. As I’ve said before, if you are in private practice, and you are not  a member of SOAPM, you are missing out.

How Many Patient Should My Practice See?

I get this question from time to time. Especially from people that are thinking about opening their own practice.

As with most things, it is hard to say unless one understands the situation. For example, some doctors go for profitability regardless of lifestyle, while others are going for lifestyle and don’t mind forgoing some profitability.

Deciding which one you want will go a long way in understanding how to tackle this question.

So where do we begin? Glad you asked. First, you need to determine a few practice numbers. Let’s start with Cost.

– Practice cost

Practice cost is everything that cost you money. This is all the expenditures that go out. Some people exclude doc salaries and doc benefits, but for the purpose of this exercise, I include everything except bonuses. Quick example, le’t say a practice will spend $450,000 in operational cost and a solo doc wants to make $200,000 in an anual salary. Then your total cost is $650,000. If the doc is comfortable with $100,000 then the cost is 550K.

Naturally, you need to bring in at least that much to pay off the bills and for the doc to get paid.  But how many patients does that translate to?

Well, for that, we need to know the average payment for each encounter (net, not gross).

– Average payment per visit or encounter

This is the net dollar amount your practice gets per encounter. An easy way to figure this out is add all the encounter in a year and divide that by your net receivables.

Let’s say a solo doc brought in $650,000 in receivables and the practice saw a total of 5950 encounters in a year. Simple math tells you that your average payment is $109.

Example: $650,000 / 5950 (encounters) = $109 avg payment

I know, I know, we aren’t looking at well visits vs sick versus RN visits. You’ll want to do that later. But I want to keep it simple. So stay with me.

Next, you’ll need to know how many days your practice is open.

– Number of days worked (or will work in a year)

If a practice is open 5 days week and is open all year around, the practice will be open for roughly 260 days. If the doc takes vacation then you’ll need to subtract the number of days off.

Let’s put these concept into practical terms.

How much do I need to break even?

Let’s say a solo practice will spend $650,000 (including the doc’s salary). We know that the average payment per visit is $109 (don’t get bent out of shape if the $109 is not your number. Focus on the process, not the numbers).

Now we can answer how many patients the solo doc will have to see in order to break-even.

Cost / Average payment = Number of patients.

$650,000 / $109 = 5963 patients

If your practice works 260 days a year you can do the math this way.

Number of patients / days open = number of daily patients.

5963/260 = 23 patients a day.

Twenty three patients isn’t all that much. Most doctors are in the 30 patients a day range. But here is the kicker, you have to see at a minimum of 23 patients a day for every single day the doc works. If the doc sees 25 one day and the next day sees 15 the doc is averaging 20 patients; which isn’t enough to make the $650,000 that we discussed earlier.

Please, keep in mind that this is a very simplistic view. Of course a good accountant can help you figure this out better.

But the idea is put some of these numbers in perspective. Once you have them, you can start going crazy with more complicating reporting. For example, you can look to increase your per encounter average or look to reduce expenses all of which will change the “patient a day” figure.

Well visits revenue is different than sick child revenue, so you can manage these two visits and make a big difference in how your practice does financially.

But again, the point is to start to give you an idea what the expectation ought to be. Once you have this perspective, then you can move in to refine your numbers.


Small or Big: What is the future of small private practices?

Many experts and pundits are predicting that the downward pressure we are seeing in healthcare will claim small independent private physicians first. Those that are not affiliated or belong to a hospital or large healthcare network will not survive, say the pundits.

The argument is that these small practices will not be able to withstand the financial and administrative pressures of the new healthcare landscape.

Others very eloquently argue that if we don’t band together soon, and form larger groups, they will not have a seat at the table when the time comes, therefore forcing them to accept a deal that may not be in their best interest in the future.

It is like jumping on a large tanker to survive a huge storm or last longer at sea without returning to port. Which is a good strategy, I guess. If your goal is to cross the Atlantic back and forth, a small independent ship may not be the best strategy.

But to me, jumping on a larger vessels dismisses the fact that there are other destinations… destinations that can be reached far easier on a smaller boat.

Jumping on a big ship, you dismiss the opportunity to go up and down the coast, making lots of stops, go in and out of ports, explore new islands and have a say on where you want to go everyday. The large vessel, once it sets its course, it is set.

The big vessel does have many advantages, like protecting you better from a big storm. Nevertheless, that doesn’t mean that a smaller vessel can’t maneuver faster around the storm or find shelter in another port.

I do acknowledge that we are being squeezed in many ways, and I agree that many will eventually go out of business, fold or simply disappear; but I don’t believe there will be a massive small private independently own practice extinction.

If anything, I see this as a huge opportunity for those of us that are small, flexible and nimble to adapt to the new challenges of the healthcare industry.

Something to think about…

Amazon might have driven Borders out of business, but they haven’t put “writers” out of business. iTunes has changed how consumers buy music, thus crippleling the record labels’ business model, but iTunes hasn’t put artist out of business. If anything, they now have more distribution channels than ever.

The Internet is challenging the newspaper industry, but we don’t have a shortage of journalist.

McDonalds and Burger King mass produce hamburgers, but we all know of a place that sells the best burger in town.

Expedia and Travelocity might have driven travel agents out of business, but it has not bankrupt hotels, beach resorts, bed and breakfast and cruise lines.

There are going to be opportunities. It is just a matter of figuring out how the delivery of care will change.

Now, I’m not suggesting that becoming part of a larger entity is a bad strategy. But what I am suggesting is that it ought not to be the only strategy.

Personally, I believe that smaller practices will be positioned uniquely to transform the healthcare landscape. How we “deliver” medicine may change, but I believe that these larger groups cannot, and will not fulfill every single need.

And that is where some of us will jump in.

How much does it cost to see a patient in your medical office?

If y0u were to ask the average business owner, how much does it cost to make widgets, my guess is that 9 out of 10 would know exactly what that figure is.

On the other hand, if you were to ask a doctor who owns the practice, how much is it costing you to see each patient, I’d argue 9 out of 10 wouldn’t know.

Now, I’m making huge assumptions of course, but I think the point is valid. Doctor’s offices do a very poor job of understanding basic business principles, such as, figuring out their cost.

Figuring out cost can get complicated, and there is certainly a lot of ways of doing it. But I tend to think that there is elegance is simplicity.

Gather the total number of encounters. Next, gather all your expenses. Then, you divide the two:

  • Expenses – 850,000
  • Encounters – 10,000

850,000 / 10,000 = $85

Under this scenario, each encounter is costing the practice $85.

Knowing, measuring and benchmarking this number will put you on the right path to stay ahead of the curve.