After 36 years in practice as a certified public accountant, I compiled a list of some business basics for physician practices. To maximize your profitability, these protocols should be reviewed at least once a year.
1. Do everything you can to generate new patients.
Are you asking your patients for referrals to new patients? Are you asking other physicians to whom you refer business for referrals? Are you reassessing procedures that you send to other physicians to see if you could do those services yourself? Is your current location the best place to grow your practice? Are you re-connecting with former patients? Are you re-negotiating contracts with insurance companies or joining a group to re-negotiate on a larger scale? Are you building a marketing brand for your practice?
Screen patient scheduling to include easily treatable problems between already scheduled appointments. Successful practices derive approximately 20 percent of their revenue from ancillary services.
2. Make a comprehensive assessment of your expenses and ways to curtail them.
Have you asked your employees for ideas in this area? Are you having suppliers rebid against other competitors? What about office-sharing with other physicians? Are long-tenured employees overpaid and working less?
3. Reassess your employees.
Do you obtain and retain exceptional employees, and pay them well? You should personally interview all candidates. One of the biggest errors physicians make is putting the wrong people in important positions. A front desk employee can make a life-long patient or a one-time patient. Train that person well. Finding a great office manager is absolutely critical to your success. Engage an experienced medical consultant to help you find that manager.
4. Consider an office retreat with your key people.
Regroup and assess everything — away from the office. Take time to prepare for the retreat with an experienced facilitator.
5. Clarify stakeholders’ roles.
Have all agreements with key employees and fellow owners of the practice clearly written and executed, including buy-sell decisions, employment terms and disability insurance.
6. Prevent insider theft and fraud.
Embezzlement is very high in medical practices. Reassess your internal controls and the segregation of cash-handling duties. Have the bank statements come to your home first and scan the contents each month before giving them to the bookkeeper. Let all your employees know that you are taking an active role in this area. Consider engaging your CPA or medical consultant to review your controls if you strongly suspect a problem.
7. Understand your financial statements.
Do you know how to interpret your medical practice’s financial data, including the financial statements? Do you get regular financial statements and do you review them in a timely manner? Are the financial statements comparable to the same period for last year and do the financial statements clearly show you the dollars that go to the bottom line for your benefit, after all expenses? Are your patient-receivable balances increasing or decreasing, and why? Ask your CPA to help you and request a statement of cash flow.
8. Reassess your choice of advisors.
Do you have an experienced CPA, medical consultant, banker and attorney?
9. Review your choice of taxable entity for IRS reporting purposes.
Often, an “S” corporation is the most favorable choice, especially with multiple providers.
10. Reexamine the practice’s retirement plan status.
Is the retirement plan designed to benefit key employees more than others? Certain types of retirement plans can accomplish this.
Jim Rice, CPA, is a shareholder at Sol Schwartz & Associates, P.C. He has 36 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 210-384-8000 Ext. 112 or by email at email@example.com.