Over the last few months, there has been a noticeable increase in articles in various medical magazines about how to make our physicians’ practices more profitable. The increase in expenses and stagnant-to-declining revenues continue to hit our medical practices hard. As a CPA who works with several medical practices, I read these articles with great interest.
Below, I have recapped some of the ideas about ways to make a medical practice more profitable. I have not listed these ideas in any particular order or importance, as each medical practice is unique in its services, patients and personnel.
1. Review the practice’s expenses regularly to cut costs as possible, and compare expenses to prior comparable time periods and industry standards.
Make sure the expense comparisons are detailed enough to understand the various types of expenses. If not in a group purchasing organization, check with the state medical association and the local chapter for recommendations. Consider a professional employment organization to bundle various payroll services and gain access to less expensive health insurance and other employer-provided benefits. Approach the banks, phone companies and credit card processors for reduced fees. A word of caution in attempting to cut expenses — cuts can often lead to reduced employee morale and productivity. Employee turnover causes an incremental increase in expenses. But quickly terminate poor-performing employees and always hire the best.
2. Find ways to increase patient collections and revenue.
Cut down on no-shows in scheduling patient appointments. Remind patients consistently about appointments. Automate a process to reach out to patients about appointments and those who are overdue for care. Know the best way to contact each patient. Keep a wait list of patients who want to be seen earlier to fill no-shows. Make sure your billing and collection personnel are the best at their jobs with timely billing and follow up. Understand the competition in the area and market accordingly with more convenient appointment hours or personalized services. Keep asking for referrals from happy patients and other physicians. An online presence with an informative, easy-to-navigate website is now important. Get satisfied patients to leave reviews. Look at the use of patient relationship management systems. Make sure that the practice’s gross charge rates are above the rate of the highest payer. Reread the payer contracts and put together a master fee schedule. Make sure the front desk personnel take the copays upfront or get deposits when there is uncertainty on a percentage payment insurance plan.
3. Other revenue-generating ideas include reviewing the new CMS codes for remote consults and existing codes for transitional care management, chronic care management and annual wellness visits.
Also, consider addiction/substance abuse care, sleep disorder treatment and obesity counseling. More practices are leveraging their time with nurse practitioners and physician assistants. Adding ancillary services can sometimes require prohibitive upfront investment, so consider renting space to complementary specialties. The list of potential ancillary services is large. Meet with a medical practice consultant about the various potential ancillary services.
With the ever-evolving practice of medicine and the shift on how physicians will get paid for their work, it is even more important to identify a practice’s weaknesses and move to resolve them.
Jim Rice, CPA, is a shareholder at Sol Schwartz & Associates PC. Rice has 39 years of experience in public accounting. In addition to providing business consultation, financial planning and various other accounting services, Rice specializes in income tax planning and consultation. He works with a high concentration of physician practices and high net worth individuals. Contact Rice at email@example.com or 210-384-8000, ext. 112.