Doctors need to focus also on the financial aspect of their business to increase their revenue and keep the medical clinic operational.
Increasing profit for doctors has emerged to be a growing concern because not many physicians are highly knowledgeable about cost control in their clinical practice. Realize that your clinic is a business operation. It operates on cash flow and you can keep it operational not only because you provide the best patient care; but also, because you can balance the books with good financial management practice. Improving operating profit means increasing revenue or reducing cost or a combination of both. Managing costs, by monitoring both the fixed and variable costs, will contribute to the practice’s profitable growth.
If you intend to grow your practice, you must ensure financial sustainability and the first step is for you to recognize that there are factors affecting profit margin for medical practice.
If you think that health insurance companies provide you better opportunity to have more income because of probable increase in the number of your patients, think again.
Insurance companies are always at your back negotiating for lower rates for the services your clinic could provide to its members. They also negotiate for longer repayment period or reimbursement of its members’ consumption. Yes, you may recognize income because of additional patients, but do you have enough cash on your account? If your practice’s insurance claims are not processed immediately, your cash flow would be affected.
Increasing prices of almost everything beset almost all businesses. You must also think that recurring expenses like office rent, staff salaries, utilities like electric, water and telephone bills, medical supplies, and other necessary expenses that you need in the conduct of your operations, need to be paid monthly. If you’re not guarding your cash inflows and outflows, where will you get the money to pay for your clinic’s regular expenses?
A machine could malfunction anytime even if it undergoes regular routine check-up and maintenance. For a medical clinic, it is very important that all medical equipment always function at its normal capacity. When it suddenly malfunctioned, you need to call the repair service center, and normally you have to pay for the cost of the repair. This is another reason why you need to know your clinic’s financial status.
Knowing your business’ financial aspect will prepare you to make sound business decisions. Advancement in technology is so fast-paced that there would be times that you need to upgrade your facilities in order to obtain new health practices. For new investments to make, you need to get sound financial advice.
Keep this in mind: don’t ignore your business financial status.
Assign a staff to do this regularly. In filing claims, see to it that the required documents in order for you to get paid by health insurance companies should always be complete. It will prevent unnecessary delays in processing. The earlier claims are paid, the better your cash position will be.
Cash Flow Statements would show you how much cash your business received and how much cash it disbursed for a particular month. A positive cash flow balance would mean you have available cash to pay for your regular and recurring expenses.
The Aging of Receivables, as the name suggests, would show you the age of all receivables that you have not collected as of a particular month or period. The lesser your receivables, the better for your business operations, because you are being paid for the services you provide.
The Balance Sheet shows you your business’ total assets, liabilities and capital as of a given period. This has a very simple formula:
Total Assets = Total Liabilities and Equity or Capital.
The Income Statement or Profit and Loss Statement (P & L) shows you how much income you have generated for a certain period. You will see, at a macro level, how much sales were you able to generate and what expenses you have incurred on a certain period. A positive P & L gives you profit . A negative P & L shows that you incur losses.
Knowing how to read and analyze your financial statements would enable you to make better financial decisions. It is easy to decide on buying a new equipment when you see that your clinic is earning and you have enough cash to cover all your expenses.
Gaining insight into your clinic’s basic financial information could help you determine if your business is thriving or not and help you make smart decisions about when and how much to spend.
You can categorize them into different age groups, status and health concerns. For example, if majority of your patients belong to the working group, you could adjust your clinic hours to accommodate them after office hours. With this, many corporate employees would choose to go to your clinic instead of waiting for the weekend, where they could choose to spend their time at home to rest or go somewhere else.
Nowadays, when your business cannot be seen on the internet, you’re missing on a big chunk of prospective clients. Having a website is another way how to get more patients to your clinic. You can include a section for appointment-setting. Your patients would be delighted to know that setting-up an appointment with you is very easy with just a few clicks away. Unlike when they still have to call, chances are they cannot connect right away and spend their precious time dialing your number.
With people trying to ask the internet first before doing anything, prospective patients seeing positive reviews about your services will persuade them to come to you. Having first time patients lining up in your clinic would result to increased revenue.
Your staff should be able to monitor your claims from insurance providers. You as a physician should know the numbers reflected on the outstanding receivable report that are yet to be paid by the insurance companies. See to it that the age of the receivables are not yet over 90 days. If you notice balances that have remained outstanding for a longer period of time, take action right away and follow-up your claims.
When your staff prepares claims from insurance companies, you must see to it that mandatory requirements or documents are complete. This would prevent unnecessary delays in the processing of your claims. Due to the volume of claims insurance companies receive every day, incomplete claims will keep piling up and there would be the likelihood that it won’t be retrieved soon unless you follow-up.
Keeping your receivables to the minimum would give your business a good cash flow. Having enough cash would enable you to buy the medical supplies and other materials needed to run your clinic efficiently.
To facilitate close monitoring of your practice’s receivables and claims and for you to have up-to-date financial statements, you could hire a medical accountant to do them for you. It’s important to get the help of an accountant with knowledge and understanding of industry-specific accounting standards. They have the knowledge in processing every financial transaction your business could incur. It would save you time that you could use in coming-up with other income-generating ideas like strategies to increase patient volume.
When new patients come to you, be sure to advise them to come for follow-up. Do the same with your old patients. Patients want to feel that their attending physicians are with them until they are completely healed of their medical condition. Being extra attentive to them is a factor that would keep them coming back to you. This is a good way to increase revenue in medical office.
Operating a clinic is running a business. It is not enough that you are able to give the best care to your patients. Being able to continue providing quality services to your clients is of utmost importance, too. As you practice your profession, taking care of your finances would enable you to preserve the cash that you need to operate your business efficiently and increase profits.
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