The balance between compliance, patient care and marketing/acquisition can be overwhelming for physicians; your academic success may not be enough to run a successful practice.
Learning more about the true costs of a practice can help you get up and running (without sticker shock) or streamline your existing practice.
From the basics of physical location, billing and record keeping, and technology needs to marketing efforts that will attract new patients, here are some of the most common financial considerations to consider:
Keeping the lights on
Running a practice with a physical location incurs the same costs that any typical brick and mortar business would have – rent, utilities, technology and communications, along with a specialty equipment and furnishings.
The location you choose, the systems you use and the actual equipment you purchase for your practice will impact your profits. Simply put, “every function, item and service has an associated cost. Understanding the differences among the types of costs and how to manage them will give you better insight to your practice’s overall financial success.”
Technology cost comparisons
If you’re using an older, legacy EHR system, you could be leaving money on the table; reviewing your technology options regularly can help you determine when an upgrade will save you time and money.
Simply having a server in house means added staffing costs – and the responsibility of maintaining that equipment. Running a comparative analysis that explores your options can help you determine if a new, cloud based solution will be better for your bottom line in the long run.
Staffing and training costs
Your employees, those who deal with patients and your back office staff, will have a huge impact on your bottom line. Each employee you hire needs to be paid, but they also may need benefits (to comply with the ACA), training or credentialing (ongoing costs include everything from annual certification and training to ACLS renewal).
Each employee should have a clearly defined job description and a reason for being there. A bloated front-end or administrative staff will decrease your margins and producitivity. Each team member should be aware of specific tasks and objectives required to be effective in their role.
Billing and collections
Insurance isn’t enough; you need to be able to collect revenue from patients as well if you want to turn a profit. The ACA has increased deductibles for most patients, driving the amount you need to collect up. In fact, patients are now responsible for an average 35% of the bill for each visit or procedure, up from just 12% a few years ago.
If your front desk team doesn’t have the correct procedure in place for collecting revenues, including precertification, referrals and patient payment agreements, you’ll never be able to collect the money you’re owed.
Taking a look at your current process and the number of bills that end up in collections can help you determine if you are losing money in this area. Your billing process matters for compliance as well; if information is not correctly entered and the outlined process is not followed, the insurer could reject your claim entirely.
Accepting credit cards, setting up automated payment plans via ACH, and having a staffer who follows up on patient payments can help boost your payments received and reduce the number of accounts that end up in collections.
“Your practice should also consider offering various payment options. These should include online and mobile payment processing, as well as automated and recurring payement plans that collect from a debit or credit card or directly from the patient’s bank account,” according to GroupOne Health Source.
Marketing and advertising budget
It may not seem important in the rush to set up everything else and the pressing need to stay compliant with OSHA, HIPAA, and other regulations, but you’ll need to include a marketing budget.
If you want to grow, you’ll need to get your name out there; physicians who have been so focused on patient care and staffing may be blindsided by the marketing costs necessary to grow a practice.
Some typical marketing costs include:
Patient materials including brochures and branded pieces
Branded promotional items
Your website and blog – and someone to run them
Your social media accounts, even if you start with just one
Local media advertisements, from radio spots to billboards or even video
Content marketing and distribution
If you’ve always worked for someone else, then the amount of time and money you’ll spend your first year on marketing and advertising can be a shock – and is enough to throw your entire budget off kilter.
According to The Society of Physician Entrepreneurs (SoPE), “The ‘golden age’ of medical practice is being replaced by the ‘golden age’ of physician entrepreneurship since there has been, arguably, no better time to be a doctor who sees the business of medicine on par with the practice of medicine as another way to help patients.”
Growing your own practice may not be easy, but the end results are well worth it, and a solid understanding of the financial aspects that are unique to a medical practice can help your business thrive, even in a competitive marketplace.
This article has been edited.
Rick Delgado is a technology commentator and freelance writer. His work can be found on Wired, SmartDataCollective and MakeUseOf. Connect with @ricknotdelgado on Twitter.
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