Give your practice a mid-year financial checkup

Give your practice a mid-year financial checkup

June 30 marks the end of the second quarter of the year. We’re halfway through 2011 already? Where does the time go? But, more importantly, how are you doing with your practice’s financial goals so far this year? Set yourself a reminder to give your practice a mid-year financial checkup just as soon as your June numbers are in. Here are a few statistics to take a look at:

Volume. Analyze both new and existing patient visits, as well as the number of requests you’ve received for record transfers. Where are your new patients coming from (i.e., which of your marketing tactics are paying off)? When patients leave the practice, what’s the reason? Are they moving away, or transferring their care to a competitor down the street? This is also a good time to see how you’re trending in terms of “no show” appointments, and think about how to reduce that number if it’s on the high side.

Accounts receivable. This is something you should be looking at on a monthly (if not weekly) basis, but mid-year is a good time to step back and review the trend. Are A/R days creeping up? If so, can you pinpoint the reason? If total A/R is down, is that because you’re doing a better job of collecting, or is it related to a dip in volume?

Overhead. Again, this is a statistic that you probably look at on a regular basis, but a mid-year meticulous examination can’t hurt. Look for variances from what you budgeted for the year in line items that you have the most control over, such as utilities, supplies, payroll (specifically overtime), and the sometimes slippery “miscellaneous” category. If you haven’t done so lately, use this opportunity to review and possibly renegotiate agreements with your telephone and internet provider, insurance company, laundry and cleaning service, and even landlord if you rent your space.

Provider productivity. This is closely related to reviewing volume figures, but it’s helpful to look carefully at not only how many patients each doctor in the practice is seeing, but where they could be more efficient in terms of patient flow or time management. Because most of the overhead in a medical office is fixed (rent, payroll, malpractice insurance, etc.), finding a way for each provider to see even one or two additional patients each day means incremental revenue that, for the most part, drops right to the bottom line.

Confer with your experts. If needed, based on your mid-year checkup, schedule time to meet with your practice accountant, financial planner, investment advisor, retirement plan administrator and/or banker. These professionals can help guide you toward wrapping up 2011 on a successful note.