Maximize your business’ bottom line for ease later in life.
Owning a medical business is like being a CEO, patient advocate, accountant, human resources manager, medical healer, and office manager all rolled into one. One job title that most physicians put last in their ever-growing list of roles is that of retirement planner. Ensuring that you have your long-term financial house in order is often neglected in favor of dealing with all the short-term problems that a medical business faces. The mere act of thinking about early retirement forces physicians to look at all of their business practices and make the hard decisions that always seem to be put off in favor of the daily practice needs. Planning for the future can seem daunting, but forcing this personal and professional review is the best thing physicians and owners can do to ensure all their hard work, education, and patient care pays off. Here are the top three ways a physician can achieve the early retirement most physicians only dream of:
1.) Negotiate your insurance payer reimbursement rates
Every year, a practice loses 3-5 percent of it’s bottom line due to inflation. Every year, your practice needs to make 3-5 percent more income to offset that loss, let alone increased rent, HR costs, medical equipment and insurance. The last thing that doctors usually consider is the easiest to rectify, and that’s having an experienced negotiator work on their behalf to increase their payer contract rates. The majority of physicians never negotiate their rates, yet even small increases on a few of your top payers can significantly impact the bottom line for your practice. Finding the right negotiator is vital, as is making sure that you give the process the time it takes to do it right. Any negotiator that tells you it will just take a few weeks is just sending a template letter to the insurance company, and it will never even reach the right decision makers. A true negotiator really digs deep into the details of your practice and your local market. Negotiating your rates is an investment that can pay off more than any other strategy if you find the right service provider.
2.) Set up your business for an easy sale.
Every doctor knows that some practice specialties are harder to find a buyer for than others, but the hardest practice to sell is the one that wasn’t primed for sale in the years prior to pursuing a buyer. Doing the legwork ends up being invaluable to your short-term business needs as well, as it’s really about putting money aside for upgrades to facilities and unforeseen expenses. Buyers want to buy a practice that is a well-oiled machine that is going to make them money from day one. What this amounts to is having very clean and well managed financial statements, patient records, and operational standards. Have your employees outline their job duties, daily tasks, and vendor contacts. In an emergency, someone can easily fill in for an employee, or you can easily hire replacements should they leave the business. This also pinpoints inefficiencies, as employees often unwittingly do redundant tasks.
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3.) Make sure your business has a solid billing foundation.
The medical billing world is a constant source of confusion and frustration for medical business owners, but evaluating a medical billing provider can be achieved by looking at their industry experience, the usability of the technology they deploy, their fee structure, and their level of service. You’re best served to find a company with ample experience in the field, as coding incorrectly can cost you far more over time than the savings of using an inexperienced biller. A medical billing company that uses streamlined software that’s easy to digest and comprehend is also essential, because you can’t understand your practice if your financials aren’t presented to you clearly and concisely. Most billers are compensated by either the fixed-fee model, which tends to be cheaper up front, or the percentage-based model, which incentivizes higher collections. This is why we recommend working with the billing company to enact a hybrid model that works for your cash flow. Finally, you have to take into account their overall customer service, as you can usually tell how effective they will be as a biller based on how effective they are at communicating to you in general.
Many practice owners feel like selling their business for early retirement is not something they want to make known, but hard work and success in life is something that should be celebrated. Many physicians that “retire” early, never really stop working, but instead, work when they want to, and how they want to. Entering the consulting world to help other physicians attain the success in their specialties is a great way for physicians to extend their working lives, while still enjoying a retired lifestyle. What better proof of your expertise is there than the fact that you knew how to plan, save, execute your business plan, and sell your business at the peak of your career? Whether it’s consulting, working fewer hours to stay busy, or sipping daiquiris on a beach, it all starts with maximizing your business bottom line using these three tactics.
Cameron Wood is a physician advocate who works with small and mid-sized physician practices to negotiate their reimbursement rates at NGA Healthcare. Cameron is an expert at forging business relationships, marketing, and working with these groups to help discover their leverage against insurance payers.