Make sure you have enough irons in the fire.
As a practice management consultant, I am always looking at trends in the healthcare industry and fine-tuning the advice I give my clients. But during certain times of the year, I take an especially close look at what’s happening around the country and review what is going on in my clients’ practices. The six-month point is one of those times.
Owning a medical practice or an integrated chiropractic practice can still be profitable, but given decreasing profit margins and lower third-party reimbursements, practice owners have to do a lot more analysis. And they have to keep a tighter rein on cash flow and the practice areas that keep that balance in the black.
Pathways to profits
The following five things are absolutely vital to keeping your practice profitable.
Examine your profit centers. You should have a list of these, and statistical data for them. Are there any trends that you can spot as rising or falling?
Divide the trends you see into two groups: those requiring immediate action versus those requiring either no action or later action. Is revenue increasing, decreasing, or remaining stable? What about overhead?
For example: Physical therapy is a profit center in many practices. Recently, Medicare cut the reimbursement it allows for PT services, but the overhead requirements remain the same.
Obviously, this change requires immediate attention to capture some of that lost revenue.
Manage overhead. Rising overhead costs can cripple a business. Combine that with decreased revenues and you’ve got a potential disaster. Pay consistent attention to overhead costs and always look to see if there’s a way to decrease them.
Overhead increases have a way of creeping up on you, so that by the time they are discovered it’s too late to do anything about them. As a general rule, if the reimbursement for a procedure decreases, then it follows that the cost of a physician trained to do that procedure should be lower as well. Yet sometimes it takes a while for the market to correct for this. If this is the case, don’t wait to have a frank discussion with any providers who will be receiving too much after factoring in the reimbursement decrease.
Diversify. If all of your practice revenue comes from one source, you are in a precarious place. Always be on the lookout for fresh income streams. These can be new services that you could offer or different conditions that you currently are not treating (but could).
It can be helpful to see what doctors outside of musculoskeletal medicine are doing. You can find many profitable add-ons this way. Also pay attention to treatments that are used in Europe but not considered mainstream here. Try to develop revenue streams that don’t depend on insurance reimbursement.
Know your competition. Keep track of your competitors on a regular basis. Your thorough check of the competition should note the entrance of any new players as well as any change in old players. Watch especially for marketing changes and new promotions.
The disappearance of a competitor may also be significant. Did the practice go out of business or just stop advertising? In the latter case, find out if it stopped running ads because they weren’t producing, or if business is now so good that the practice doesn’t need marketing efforts.
Don’t get complacent. Even if you have been successful in practice for many years and are doing great, in the current marketplace you should stay vigilant and actively search for revenue enhancement measures.
Marc H. Sencer, MD, is the president of MDs for DCs, which provides intensive one-on-one training, medical staffing, and ongoing practice management support to chiropractic integrated practices. He can be reached at 800-916-1462 or through mdsfordcs.com.