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.

Why Your Practice Is Having A Hard Time Making Ends Meet

The front desk representative handed me a stack of forms to fill-out as soon as I announced I had an appointment with the specialist. It was the beginning of the year. Everything had to be updated. We all know the drill.

While the front desk clerk was making copies of my insurance card (why do we still make copies?), I reached into my pocket to pull out the money to pay for the copay. When she got back to her chair I extended my hand with the money. She said, “We’ll bill you. Don’t worry about it. We just changed computer systems and everything is crazy.”

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The PM in me wanted to ask for the administrator of the practice and tell that person, in a polite manner, ARE YOU CRAZY? Have you considered the financial impact of co-payment collections in your practice?

The manager wasn’t around, but since you’ve read this far, let me tell you the financial impact of not collecting a copayment.

Let it slide

Say the front office lets one co-payment “slide” each morning and afternoon, how much money are we talking about? Let’s do simple math:

2 x $25  x  5 days per week  x  52 weeks =  $13,000!

$13,000 over the course of a year if we assume each co-payment is $25 each.

If each copayment is $35, the number jumps to $18,200

But wait…

But that is not the end of it. By not collecting at the time of service, the practice then incurs a cost to collect the money owed. That is not the end of it either. Chances the practice will collect 100% of those missed copayments is unlikely. Certainly not impossible, but unlikely.

Wild guess

A practice that isn’t very good at collecting copayments up-front is probably not very good at collecting for patient balances after the fact. Is that a safe assumption? I think so.

We’re talking about the practice’s margin

There was a time when copayments and patient balances did not command a large percentage of a practice’s revenue. But things have changed. Now, copayments and balances account of upwards of 30% of a practice’s revenue.

Analysts say the percentage is increasing as insurance companies continue to shift the risk to their customers (did I hear somebody say high deductible plans?). And by customers they really mean health providers because we are the ones stuck with the responsibility to collect for patient balances.

First things first

My advice to the administrator of that specialist practice? Join SOAPM and thank me later. 

My second piece of advice: train, empower and support your front office staff to take the necessary steps to collect co-payments (and patient balances) while the patients is in the office.

It is your best chance (sometimes your only chance) to get paid for your doctors’ work.