Be willing to take action and responsibility as the CEO of your medical business including delegating the management of financial issues to experts.
There has been a great deal of discussion about the current financial state of American doctors in the news and in many online forums frequented by physicians. All problems identified in the article and the subsequent discussions it has spawned are related directly to the general poor state of the economy.
Primarily, decreases in compensation; changes in drug reimbursement policy and regulations and unrealized earnings or "leakage" of as much as 15 percent are cited as key factors for the seemingly all time high number of doctors in tough financial straits. While my experience with doctors across the country leads me to agree with these issues we have seen remarkably different outcomes based on how these financial ailments have been treated. This is the treatment plan the most successful follow:
Get a Diagnosis – What You Don’t Know Will Hurt You
Just being a good doctor is no longer enough. You must understand key issues like expenses, cash flow, and projected earnings and the options available to manage them. If you need help, consider investing in relationships with advisors like a top CPA or practice management consultant that has experience in these areas. The deadliest outcome is being surprised.
Take Decisive Action
Act on that information immediately, before a crisis occurs that requires drastic measures. Waiting to reduce expenses or increase collections can be disastrous. It is better to err on the side of caution.
Go On a Diet
If it doesn’t make you more money or create a significant long-term savings at least temporarily hold or reconsider any significant purchase or capital outlay.
Cash Is King in Lean Times
Building reserves that will sustain your expenses in the event of further income changes is key. If your cash flow was suddenly stopped or significantly decreased tomorrow, how long would you be able to meet your current business and personal overhead? What would you cut or change first, both personally and in your practice, to reduce overhead so it could be reallocated and what are your essential overhead items? Be sure you know your “survival number” and plan to be able to sustain it.
Implement Risk Management Strategies
This is a bad time to self-insure against, take, or continue risks that can be transferred away. Make sure you understand the coverage limits of your personal and professional liability insurance, implement asset protection strategies that will protect the assets you currently have and address any loose ends that could cause an uncovered expense.
When earnings are restricted by market conditions it’s more important than ever to keep more of every dollar you earn. Identify areas of loss or leakage in your practice due to billing, coding collections, and expenses and act on them. Examine your accounting and tax planning and ask your advisors to identify any opportunities you are not taking advantage of.
Innovate and Market Aggressively
All consumers, including those of even essential medical services, are feeling the pinch and spending accordingly. Give them a reason to work with you now and to help channel others to your practice where possible. This means better service, more touch, and more reminders that you and your staff are there to provide them the best service, value, and care. Carefully examine the balance of high and low profit services your practice provides and look at new revenue opportunities and potential practice areas. Those who refuse to change their failing business model are surrendering in advance.
This plan is deceptively simple; get the right help and educational resources for your family. While the economic crisis is not over it can be managed and survived. Be willing to take action and responsibility as the CEO of your medical business including delegating the management of these issues to experts.
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