A Brief Primer On Financial Management For Physician Practices
The primary care physicians market is one of the thriving industries in the US, valued at a whopping $260.1 billion in 2021. But despite how favorable the industry might seem, most medical practices face significant threats, including rising administrative burdens, falling payment rates, and costly labor.
In such a fast-changing environment, understanding the key concepts of proper financial management can give you that competitive edge you need to establish your business and continue providing patients with high-quality care. Learn more in this quick-start guide.
Take Control of Your Practice’s Financial Management
While primary care physicians are mainly concerned with delivering care and treatments to patients, the financial aspect of running a business in healthcare can’t be overlooked.
More specifically, studies have confirmed that it is the physician’s responsibility to control the practice’s finances and clinical costs – especially now that practices across the nation are experiencing an average 32% drop in revenue.
You might not have the experience to single-handedly manage the practice’s finances, but there is a lot that you can do to ensure that your business remains profitable, including choosing an experienced accountant and exploring the industry’s benchmarks.
Streamline Your Finances With a Medical Practice Management Software
New technologies play a vital role in any healthcare business looking to remain competitive and profitable.
In particular, medical practice management software can offer a wide range of unprecedented benefits, including:
- Reducing labor costs
- Automating processes such as patient and insurance billing
- Recording patient payments and keeping track of reimbursements
- Managing patient records and information
- Keeping up with supplier bills and payments
Even more importantly, a medical practice management system can enhance the quality of care and patient satisfaction without requiring additional investments.
Control Your Cash Flow – But Invest in Growth
Poor cash flow management is the reason behind 82% of small business failures – and medical practices are certainly not immune to this threat. That is why physicians and their accountancy department should focus on keeping on top of bookkeeping, reviewing cash flow statements, and creating budgeting plans that align with the practice’s scope.
Pro tip: While cutting unnecessary expenditures is essential to keep your cash flow under control, investing in the right projects is just as important. For example, marketing campaigns might be necessary to build a brand for your medical practice and enlarge your patient base.
Choose Your Merchant Services Wisely
No business can afford to overlook the importance of a reliable merchant service provider.
However, in the healthcare industry, partnering with a merchant service provider is more than just a growth strategy – is a necessity. Due to the complex nature of medical billing and the various parties involved in financial transactions, most medical practices require ad hoc banking and payment processing systems.
When choosing the right third-party provider for your clinic, consider the benefits of leveraging new technologies (i.e: virtual and decentralized banking) and open an online bank account with SoFi to manage your finances from your smartphone or laptop.
Benchmark Performance and Salaries
In the race to provide more advanced and accessible care to patients, it is easy for medical practices to overlook the industry’s standards and run into cash flow issues. You can easily prevent this from happening by benchmarking your practice’s performance and your team’s salaries.
If you are looking to attract top candidates in the area, consider investing in other unique selling points other than unnecessarily-high salaries, such as employee benefits, continued education and training programs, and great workplace culture.
Review Your Monthly Statements and Safeguard Your Practice’s Financial Health
On average, primary care physicians care for 1,200-1,900 patients. So, it isn’t surprising that you have limited time left at the end of the day to review your practice’s finances. However, your patients, medical team, and community as a whole rely on your ability to manage your business’s income and expenditures.
Luckily, when working with a specialized accountant, there is an easy way to monitor your clinic’s financial health: simply check your monthly statements. While these might only offer you an overview of your practice’s finances, they are an efficient tool to identify cash flow issues and trends before they develop into more severe issues.
