Are You Making These 5 Financial Mistakes In Your Medical Practice?

We know doctors don’t get finance or accounting training during the time they spend in medical school. As a result, they tend to rely heavily on practice managers, accountants and other financial experts with managing their money.

 

But as medical practice owners (aka small business owners), the buck stops with the doctor. Thus, it is wise not to rely blindly on the “experts” and from time to time take a look at areas of the business for yourself.

screen-shot-2016-03-26-at-11-33-49-amBelow are five areas I’m going to suggest for you to explore. Get acquainted with these suggestions. You never know. Overlooking them may be affecting your practice’s bottom line.

1 – PAYING HIGH-INTEREST RATE LOANS

Loans can be great financial tools to help practices remain liquid (aka have cash in hand) when cash flow is low or if an unexpected expense arise.

But practices that mismanage these loans can end up paying fees and interest that eat up what are already thin margins.

It is important to be aware that not all bank loans are created equal. Equally important is understanding terms – interest rates vary depending on the type of loan – and knowing concepts like the difference between a secured loan vs. a non-secured loan.

Overusing loans, not reevaluating them periodically and failing to adjust to current circumstances or failing to stay informed on interest rates are all things that can erode business’ income.

2 – OVERLOOKING HOW YOUR CREDIT CARD MAY BE CHARGING YOU INTEREST

Doctors love to credit cards to pay for practice expense. Why? For the credit card points, of course. A single doc can potentially accumulate six figures in points by paying for vaccines alone. Free airfare anyone?

Even though you may pay the balance in full every month, I suggest to look carefully at the card’s fine print first to understand how the credit card charges interest. Because some cards charge a daily interest based on the daily balance.

Let’s say you have a credit card that charges 10% monthly interest. But you’re not concern about the interest because no matter how much you charge the card in a month, you pay it off – in full – at the end of the month.

Banks are well aware of this. So to make money off people that pay their balance in full, they divide the monthly interest by 28 (cycle days). So a 10% monthly interest, the credit card will charge you .0357% daily on your balance.

3 – MAXING OUT CREDIT CARDS

Thirty percent of your credit score is based on how much of your available credit you are using. If the card is in your name, and you have cards maxed out, your credit score drops.

Low credit scores can be an issue, of course, when applying for a loan of any kind; high credit card balances often lead to denied applications.

Are you paying a higher interest rate on some of your credit cards because you carry high balances on others? It’s worth checkin.

4 – NOT PLANNING FOR A RAINY DAY

Most practices are tremendously unprepared financially for unforeseen circumstances. Partly because most, if not all, the money that comes into the practice is spent or distributed in full to each partner at the end of the year.

You don’t need to be around long to know the unexpected comes by often. Hence, the practice should always have a reasonable amount of money set aside because sooner or later you’re going to need it.

Not only is it crucial for your business to set money aside for financial emergencies, but it also is good business practice.

Not to mention that with cash reserves, instead of drawing from those high-interest loans or maxing out your credit card, you’ll have what I like to call a cushion fund for times when we need money to get us through a rainy day.

5 – NOT DRAFTING A PARTNERSHIP AGREEMENT

I’ve seen this happen before. A few docs decide to quit their employment to start their medical practice.

The group aligns with the vision of serving patients better, the lure of sticking it to the man and the prospect of increasing their income.

The excitement of opening up your practice with friends or like-minded coworkers and everybody coming together towards a common cause often puts the task of drafting a partnership agreement on the back burner.

Don’t delay a partnership agreement. In fact, do it as soon as possible. Here is why:

a) It’s the wise thing to do.

b) It is better to work out details when everybody tends to be happy excited and looking forward to the future than to work out the details during a nasty, vicious divorce.

Drafting a partnership agreement when you are angry, resentful, feel duped or taken advantage of is… well, I don’t have to tell you it’s bad.

It is also important to review and update your agreement every few years with your attorney to ensure it reflects current circumstances.

 

 

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.

How Well Do Parents Know What You Do As a Pediatrician?

It’s hard to appreciate the value that pediatricians provide when one is not aware of exactly what it is that pediatricians do.

During the summer months, I posted on our practice’s Facebook page, a note encouraging parents, to schedule their children’s wellness visits.

Although the message was for our entire Facebook community, I wanted to catch the eye of parents with teenagers. Don’t know how well you manage teens in your office, but in our office, we have decent wellness visit numbers with younger patients. The teen population?

Not so much. Once the teen years kick in, we mostly see them when they are sick.Screen Shot 2016-02-26 at 11.48.51 AM

I wanted to encourage parents to make their wellness visits but also throw in a subtle nudge to parents with teens.To get their attention, I opened with this line: Did you know pediatricians are trained to treat children from birth to adolescence? Then I went on to talk about the importance of wellness visits etc.

Something interesting happened. The post outperformed other Facebook post. It received more likes that than the ordinary. But that the surprise me. What surprised me the most, were the comments from parents.

One mom said, “it’s good to know the pediatrician can see my teen.”

Another said, ” Timothy is going to be so happy when I tell him Dr. B can still see him.”

WHAT WAS THE LESSON?

It’s an age-old lesson. It’s a lesson on assumptions and what happens when we make them.

That simple, otherwise ordinary status update, got me thinking about how well (or not) we communicate what it is that we do as pediatricians. If so many people weren’t aware that pediatricians can treat teens and beyond (0-21), what else don’t they know? The irony is that our website is tagged with the line “Pediatric & Adolescent Medicine.”

OPPORTUNITY

We clearly have a communication problem. And I would argue that our lack of proper communication about what it is we do as pediatricians (more than runny noses and giving shots) is why many parents don’t see the distinction between a retail clinic and a pediatrician.


 

It’s hard to appreciate the value that pediatricians provide when one is not aware of exactly what it is that pediatricians do.

 


 

The good news is that there is a significant opportunity for pediatricians to cover a lot of ground. How so? By using social media channels to educate our community about all the great services we are trained to provide.

I also believe that leveraging this opportunity could aid your practice in differentiating itself from the competition.

WHAT IS YOUR COMMUNICATION STRATEGY?

Since I realized there was a chasm between our assumptions and the reality, I’ve been intentional about informing our community about the training, knowledge and expertise our pediatricians can address.

Some of it may seem too obvious for those of us that do this every day. Like explaining the importance of wellness visits.

But the truth is, some parents don’t know about yearly wellness visits. They assume that because the child no longer needs shots, they don’t need to go to the doctor.

Beyond promoting wellness visits, I use many of the things included in the Bright Futures guidelines as a way to highlight that a visit to the pediatricians is highly comprehensive.

And by educating our population, I’m also marketing our practice in a unique way. Instead of mentioning in a promotional piece that we accept most insurance plans, I may mention that how we can provide family support, safety and injury prevention, or mental health.

MARKETING STRATEGY

Not only is promoting and sharing this information relevant and valuable to parents, but I also think it is an excellent way to differentiate ourselves from the MinuteClinics or other medical services that overlap with pediatrics (i.e. Urgent Centers, Family Practice, Telemedicine).

YOUR CHALLENGE

Think about your medical practice’s communication strategy, or lack thereof. What is your practices unique selling proposition? What problems do you solve that others don’t? Then think about how best to communicate your message. Also, consider the channels you’ll be delivering your message. By channels I mean, traditional advertising, email campaigns, social media, etc.

Remember, each channel is unique, thus requires you to craft the message differently.

I’ll leave you with this… times are changing. That is certain. And we have two options, two paths to choose from. Disagree with how things are changing, or find ways to agree with the shifts in a way that benefits you and your practice.

Embrace Change And Transform Your Medical Practice

In medicine, spontaneous change isn’t encouraged. And for good reason. Life is at stake. Change is only encouraged when there has been plenty of scientific evidence to support the change.

Screen Shot 2014-08-21 at 11.37.11 AMWhen it comes to changes as it relates to the business side of medical practices, many adopt the same posture that is common on the medicine side.

For example, new AAP recommendations/guidelines, treatments, screenings, clinical protocol and vaccines? We’re okay with  implementing these changes. Retail based clinics intruding on our turf, disrupting “our” medical home model? Unacceptable.

Vaccine pricing increases… Facebook… Yelp, Healthgrade.com…ICD-10… high-deductible plans, unwelcome.

Apples and oranges?

You might say this isn’t a very good comparison. You may be thinking that adopting new guidelines from the AAP or adjustments to the vaccine schedule based on the CDC’s recommendations is not the same as MinuteClinics “stealing” patients or negative – unfair – reviews on Yelp.

I’d argue they are the same based on the premise that all of these changes – whether medically driven or market driven – challenge our practice’s status quo.

We’re in a unique position

One of, if not the biggest, challenge we have to manage, is the tug of war between being clinical providers and business owners. On one hand, medicine is about people’s health. Therefore medicine should not be influenced by market-forces, financial and economic influences, or consumer trends. Medicine is driven by science and patient care.

On the other hand, private pediatric practices are businesses just like a car-wash is a business, just like a dry-cleaners is a business, just like Microsoft and Apple is a business.

This means private independent pediatric practices are not sheltered or protected from market-forces or trends that challenge and potentially disrupt the businesses.

If we are in business, then let’s be in business.

The business world – the non-primary care business world – not only accepts changes, but they embrace it. At least the ones that want to survive or that have survived.

Change demands from them to find new ways to adapt, create, meet and resolve the new challenges. Change also gives them motivation to remain competitive.

Episode On How We Embraced Change

A few years ago, a large, well established pediatric practice, opened shop right next door, literally. We were so upset when we found out.

We wanted to call the landlord and complain to them about how unfair it was to rent space to a pediatric practice next door. Why couldn’t they find an OB practice?

We didn’t call or complain, much. But here is what we did.

We assembled the team to brainstorm ways we could keep our competitive advantage. We asked ourselves, how could we improve? What areas of our practice could we enhance? What did we do really well? What didn’t we do so well? Could we provider a better experience? How so?

Adapting

We made several changes. For example, there was a renewed commitment towards providing unsurpassed medical service from our staff. We decided to open early and close later than the practice next door. On our website, we highlighted a couple of our ancillary services (i.e. VEP) and our extended hours. We also began to stagger lunch breaks so that we wouldn’t have to close for lunch.

The market rewards those that change

Looking back, the pediatric practice moving next door actually made us a better practice. Without them, disrupting our status quo, we would have remained complacent. And complacency doesn’t drive advancement, growth, or progress.


Did you like this post? Did it resonate with you? If so, I’d like to read about it. Write your thoughts the comments section below. Oh, and don’t forget to share this post. Help me, help others to embrace change. 


Big is Not Necessary Better – How a Solo Doctor is Changing Pediatric Healthcare in Her Own Way [Pediatric Practice Management AwesomeCast]

Today on the AwesomeCast, we had the pleasure to talk to Dr. Robin Warner.

Dr Warner is a solo doc outside of Cleveland. Chip and I were interested in talking to Dr. Warner for several reasons. For starters, we wanted to learn about her experience as a solo doc. We also uncovered some interesting patterns that I think are great lessons for those of us that have smaller practices.

Dr. Warner also shared a project she has been working on that I think is absolutely brilliant. Here is a hint… she is embracing the smartphone craze, leveraging people’s attraction to on-line games and using it to provide deliver awesome pediatric medicine.

Stick to the end of the PodCast. There are a lot of nuggets that if you aren’t paying attention, you’ll miss.

Enjoy!

To listen to the audio, click below.

Audio

iTunes

#20 Key Performance Indicators Smart Practice Managers Measure [Pediatric Practice Management AwesomeCast]

Screen Shot 2013-11-07 at 7.42.08 PMFor today’s AwesomeCast, I invited my friend Paul Vanchiere from the Pediatric Management Institute. Apparently, Chip had more important things to do… Pfff. Family. So he was MIA for this recording.

If you don’t know about the Pediatric Management Institute, make a note to visit. Paul and his team are doing some really cool things to help pediatric practices manage their business better.

Paul knows a few things about key performance indicators, why they are important, and most important, how to calculate them. So I sat down with him and asked him a few questions regarding the topic.

On the AwesomeCast, Paul shares with us an area on his website where you can find explanations, formulas, examples and descriptions for all the key performance indicators.

For details check out this link: Calculators – KPI 

And if you want to learn about the seminars Paul and his crew is doing around the country, visit: PMI Seminars

Here are other ways you can check out the AwesomeCast:

#18 Is the Independent Physician a Dinosaur? [Pediatric Practice Management AwesomeCast]

ExtinctionNot too long ago, you couldn’t avoid reading in the media about how the independent doctors  were becoming extinct.

Pundits and experts in the field stressed that if independent doctors, those that own their own practice, didn’t join, sell, merge or retire all together, they were going to walk the same path as travel agents, video stores and mom-and-pop own book stores.

I’ve subscribed to a different thought.

I’m crazy enough to believe that there will always be a place for the small independent practice.

Sure, practices will have to adjust, figure out new ways to meet the demands (just like any other business) of a changing healthcare landscape.

But I’ve argued that even though travel agents aren’t around anymore, airlines, hotels and car rental companies are. Even though video stores are a thing of the past, Hollywood hasn’t stopped making movies. If anything, we have access to more video content than ever before.

But it has been a hard sell (not that I’m really selling anything) to convince people that the end of the world for private practices is not a certainty for all.

Recently, I’ve received great news from the consultant fronts. In conversations with Susanne Madden from the Verden Group, Mary Pat Whaley from Managemypractice.com and the Pediatric Practice Management AwesomeCast’s very own, Chip Hart with PCC, it seems that the independent private practice pediatrician is on the rise.

They all have shared with me that in recent months, their offices have field numerous inquiries from pediatricians looking to breakaway from the, let’s say, industrialized, corporate, factory style medicine, and start their own practice so they can practice medicine on their own terms.

Chip and I couldn’t wait much longer to talk about this topic because it is an area we are both very interested in. So for this week’s episode, we dedicate almost a full hour on the topic of being an independent physician.

We talk about what it means to be independent, the different kinds of independency (yes, there are several kinds), what are some of the trends out there and what to look for when exploring other options for your practice.

Here are other ways you can check out the AwesomeCast:

You Can Take Away Our Lives, But You Will Never Take Away Our Freedom

Braveheart_1My co-host on the Pediatric Practice Management AwesomeCast, is working a project that I think many that read this blog will find interesting.  I’ll let you read it directly from Chip’s original post:

Over the past couple of days, I’ve been working with some friends on a concept publication entitled “Independent Pediatrics.” The idea is to share the myriad stories of what it’s like to practice pediatrics independently – the challenges, the success stories, the future.

This will be as commercially agnostic/invisible an endeavor as possible and I’m going to be looking for people and practices with great stories. Kinda’ like “The Moth” or “This American Life” for pediatrics, but printed and WWW-based for this round 🙂

The premise, as far as I’m concerned, is that independent pediatricians are _not_ dead or dying. In fact, if you check in with the consultants, we appear to be in the midst of a renaissance.

I don’t have all the details yet, but we are in a rush to produce something in time for the NCE (what are we thinking?). I’m looking for some particular content and I’m being told that I can’t simply make up quotes, sigh. So, I’ve whipped up a 4? 5? question survey for independent pediatricians and their employees to prime the pump of our material.

If you have 5 minutes, or less, I’d be grateful if you could give me something good to chew on:

https://www.surveymonkey.com/s/Independent_Pediatrician_Take_1

Thanks for your consideration and when there is something to see, I’ll share it here.

This is a topic that I’m very interested in, considering that the practice I work for, is in fact, an independent practice. Not only that, we want to remain independent. So I’m encouraged that Chip and his friends are taking on this endeavor.

By the way, in an upcoming episode of the AwesomeCast, Chip and I spend about 55 minutes discussing this issue. I think you are going to find it very interesting and valuable. So stay tuned.

Do Your Patients Expect Something for Nothing?

iStock_000000385270SmallI would say yes.

However, I would submit that the reason our patient’s expect something for nothing is our fault, not theirs.

The truth is, we’ve given away so much over the years. And now that we want to charge for things (that have always cost us) like forms, after hour phone calls, and other things, people think we are now wanting to collect for things that they were lead to believe had no value.

Not to mention they often think we are nickle-and-diming them now.

But some practices have been very careful about not falling into this trap of giving away their time and their resources.

Take Village Pediatrics for example. Dr. Gruen and Dr. Gorman charge parents between $150 and $325 (depending on how many children) for a plan they call the added benefits plan. Here is what their website says about the plan:

This modest per-child administrative fee includes services that may be non-covered or non-reimbursed by your insurance company and are typically billed for at other medical offices. Such services include: e-prescribing, unlimited school/camp forms, as well as 24/7/365 access to the doctors without the use of a phone triage service. This fee has allowed Village Pediatrics to offer prompt and personalized care without dramatically increasing our practice volume, dropping insurance plans, or significantly raising our cash fees.

Why would parents pay above and beyond their health insurance premium every year to visit Village Peds?

Because Village Peds from the beginning decided to take a stance and tell parents, what they do has immense value. The time they spend with patients/parents in and out of the examining room is of great value. And if patient/parents want access to Dr. Gruen’s and Dr. Gorman’s valuable time and expertise, parents are going to have to pay for it.

I say, Good for them!! I applaud Dr. Gruen and Dr. Gorman’s efforts in establishing a practice that focuses on providing value worth paying for.

And my guess is that nearly 100% of Village Peds families pay the fee. Because all the other families that didn’t see the value, don’t have their children seen at Village Peds.

Here is the hurdle for me.

When I first read  the things Village Peds  offers  as a part of their added benefits plan, I said to myself, we can’t start charging like they do.  Why? Because all the things on that list our practice already provides without getting anything  for it.

Who’s fault is that? The patients/parents?

No. This is our mistake.

For those of us in the private health care world, we need to get over the fact that people are going to complain about paying for something they used to get for free. Heck, I don’t like to pay for something I used to get for free either. So we can’t hang that over our parents.

Furthermore, I’d emphasize that it is our responsibility to educate our parents that there is HUGE value in everything we do (both inside and outside the examining room).

If we don’t educate them, parents will continue to expect what they’ve always gotten. Which is something for nothing.

This is something I’m gonna start thinking about more. Especially if the plan is to remain an independent private practice.

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.