Strategic Planning for Medical Practices: Financial Management

If you are an owner of a medical practice or thinking about starting one, to have a successful practice, finance has to be a part of your strategic planning. 

Revenue:

You might be thinking, where do I even begin to financially plan for success? Well, it starts by forecasting how much revenue you want to make based on how much your practice made the previous year. If you are starting up a practice, you want to create a Pro-Forma. It is an estimation of how much revenue or patient volume you would like to see for the year. Based on the fee schedules of insurance companies, you can average what your reimbursement for new and follow-up patient visits will be to forecast your revenue. 

The main and most common way to generate revenue for medical practices is by seeing patients and either billing the patient or their insurance for reimbursement. Here are some other ways to generate extra revenue for your practice:

1. Laboratory Testing Service
2. Selling office products
3. Med Spa Service
4. Weight Loss Service
5. Medication Administration Service Fee

Adding new ancillary services to your practice is a great way to boos your practice revenue while incurring very little expense. 

Other ways to increase revenue are: 

1. Train physicians to code correctly
2. Encourage your patients to refer their friends
3. Add one more patient per day to your physician’s schedule
4. Re-evaluate your payer mix
5. Extend practice hours
6. Offer more timely appointments

Expenses:

Making money is always the first thing we tend to think about however, controlling and minimizing expenses is another part of managing our finances that is crucial to a practice financial success. 

As a healthcare consultant, I like to keep things simple. The less money you spend, the more money you have. This is a principle I teach my clients and it has helped them to be mindful of business expenses and to renegotiate with vendors. 

Here are some ways to minimize expenses:

1. Convert paper to electronic format
2. Renegotiate with vendors
3. Work to lower supplier costs
4. Manage inventory closely
5. Renegotiate your managed care contracts

Budget:

Last but not least, budgeting. This is the most important aspect of financial management for a practice. This should be reviewed on a monthly basis to compare your actual finance to your budget. 

As the months progress, you can determine whether you are exceeding your budgeted goal or not. If not, understand why and make adjustments to your practice operations to achieve your budgeted goal.