When I added another physician to my practice, I underestimated two things, and expenses exceeded income for a while. Today, bills are paid and there’s money in the bank.
We use the term “failure to thrive” to describe a condition, usually in the elderly or in infants, in which the patient loses weight, or fails to grow without any obvious illness. For a while, I was worrying that our practice would succumb to it.
Not that we were on the verge of bankruptcy. But when I was solo, the amount of income generated was limited by the fact that I can only be in one place at one time, and can only see one patient at a time. The schedule was such that there was a significant wait for new patient appointments and, if things had continued the way they were, even follow-up patients would have a tough time finding available slots. At that point, we were covering all expenses, and I was able to pay back my primary investor (i.e. me). So I hired doc #2. I figured that expenses would not increase dramatically, and if she could pull in the same amount as I do, the practice would be more profitable.
Well, I underestimated two things. Expenses increased more than I anticipated. Not double, mind you, so if she were collecting as much as I do, we’d still be ahead of the game. But that brings us to the second issue. I underestimated how long it would take for her collections to catch up. Oh, I knew that the first couple of months would be slow. All her patients would be new, and therefore their appointments would be longer and she would see fewer patients.
But I somehow thought that by the third month, her schedule would be a good mix of new and follow-up patients. The problem was (and still is, although to a lesser extent) that referring physicians are telling patients to see me. Partly because they love me (ha ha), but also because they were unaware of Doc2’s existence. Oh, we sent letters and post cards. We had a “welcome the doc” party. I made sure she went to the hospital holiday party. My staff tells patients that they can wait two months to see me, or they can see Doc2 in two weeks. Many are fine with that, others insist that their doctors said they “have to” see me. That is often followed by a phone call from their doctor’s office asking if they can be seen sooner than two months from now. When given the option of having their patient seen by Doc2, the doctor’s office is more than happy.
Anyway, due to both underestimations, expenses exceeded income for a while. I began to worry. And while I knew that I needed an associate, if only to maintain my sanity, I began to wonder if I made some fiscal mistakes. Am I paying her too much? Did I hire another staff member too soon? Am I paying the staff too much?
But all is well, and after six months of failure to thrive, the practice is back on its financial feet. Bills are paid. There’s money in the bank. OK, some of that belongs to the primary investor (i.e. me), but that’s more of a security blanket now than anything else. This month might be a little tight because Doc2 is going away to a conference, and one doc means half the revenue, but I think we’ll be fine for now.
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