South Florida Hospital News
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March 2008 - Volume 4 - Issue 9

Practice Management: 5 Fundamentals For a Healthy Bottom Line

Once the fundamentals are in place, the rest will follow! Consider these five tried-and true principles for ensuring long-term profits and practice growth.

Fundamental #1: Don’t pay too fast.

It may be tempting to pay bills quickly. But you do so at the expense of cash flow. If the industry norm is payment in 60 days, you can score the same points by paying in 40 days as you would by paying in 10.

Fundamental #2: Keep on top of past-due accounts.

Regularly generate a report that flags past-due accounts, and phone patients immediately with overdue bill reminders. Paying staff to make the calls or retaining an independent contractor may make sense here. It’s a myth that loyal patients will resent the calls. Patients actually expect their physicians to operate in a professional way. As long as the person who phones is diplomatic and businesslike, problems are unlikely.

Fundamental #3: Watch your payroll.

Nearly all practices have put payroll costs under the microscope at some time, only to see them creep back up once attention is focused elsewhere. Your best bet is to make payroll a regular subject of analysis. Look especially at overtime, the most common cause of bloated payrolls. Make sure that overtime is used only for special needs, not as a regular part of practice work schedules. Look also for ways to maintain current work levels with fewer employees or increase levels with the same personnel (e.g., adding more efficient equipment or providing staff with additional training).

Fundamental #4: Reign in overhead.

When you place orders for supplies—whether it’s copier paper or X-ray film—make sure you’re buying in usable quantities that can be moved efficiently in and out of your practice. Take advantage of specials and seasonally low prices. Caution: It might be tempting to join with another practice to buy in larger quantities, but that rarely works in real life. Each practice’s requirements are likely to be a little different, and your practice could suffer if the other business doesn’t pay on time.

Fundamental #5. Watch the margins.

After you’ve been in practice a few years, it becomes easy to neglect keeping tabs on profits. You need to know the margin on each item in your service line. Don’t waste practice resources selling unprofitable services. Focus also on generating more revenue or providing services more cost-effectively to existing patients, as opposed to trying to land new but unprofitable patients.

Peter Anderson, V.P. Healthcare Business Banking Officer, National City SE Florida Region, can be reached at or (954) 745-1185.

This article was published in the Spring 2007 issue of Business Insights for Healthcare Professionals, a quarterly publication of National City.

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