Medical practices are primarily known for administering quality care, but behind the scenes, they’re large organisations that operate like any big business.
With the constant pressure of paying investors, chasing sales, managing staff, and looking after patients, it can be easy for money to slip through the cracks. Without closely monitoring your finances, you risk losing profit and putting your entire practice in jeopardy. And without revenue, you miss out on opportunities to grow your practice.
As an entrepreneur, you have to continually assess and improve your business inside and out to keep it in good health.
With this in mind, here are common reasons that private practices lose money. Keeping a close eye on the following factors will have a positive impact on your bottom line.
Practices that operate efficiently are more likely to grow, attract new clients, and maximise their profits. Operating efficiently can sometimes mean hiring new people to bring in new business for your practice. If you are looking for medical sales headhunters, then there are a ton around, that can hopefully find you, new employees, to ensure everyone has time to focus on their individual tasks.
You can’t expect efficiency if your staff is drained or overwhelmed all the time. Overworked employees are more likely to make mistakes or fall behind schedules. It will only be a matter of time before these affect your cash flow.
Do an honest assessment of your staff’s daily workflow and performance. Check if everyone in the office has a level workload. If not, consider redistributing responsibilities. It may also be time to outsource certain administrative tasks like billing or customer support. Set your operations back on track by investing in tech practices such as telehealth. In doing so you’ll have a more productive staff and financially stable practice.
Poor billing practices
The medical billing process can often be a nightmare for providers. It consists of a range of steps that involve different departments and payers. Information should be properly collected, and a single misstep can cause payment delays and denials.
Your revenue largely depends on the effectiveness of your billing process. Incompetence and miscommunication can bring unnecessary financial losses in your practice. For example, staff may fail to update patient insurance coverage or simply forget to send invoices.
Having a proper system in place will allow you to bill customers quickly and efficiently. Investing in health information technology like EHRs or specialised software for revenue cycle management can streamline your payment collections. Enforce proper billing practices such as having a process for confirming insurance coverage, accepting new claims, and following up on pending balances.
Examine your practice’s monthly collections, charges, and accounts receivable for unexplained changes or trends. Search through all your drawers for missed checks or receipts that don’t match your accounting records. Gather all unprocessed claims, appeals, or letters from patients that haven’t been settled. Store them in one file and resolve each issue immediately.
Providing overtime wages may seem like a quick way to increase output and employee motivation. Unfortunately, overtime can cost your practice thousands of pounds per year.
As such, overtime should be tightly controlled. Implementing split shifts or 10-hour days can minimise overtime. Limit the number of persons for each task and insist on pre-approving all overtime. Establish a staffing budget and stick to it. It can also be a great help if you seek the help of companies that specialise in managed care contracting.
Petty theft and embezzlement
Petty theft is one of the most serious issues medical practices face. Stealing office supplies or pharmaceutical samples are bound to occur at some point. Taking home a ream of paper or a box of pens may not seem like a big deal, but if it’s become a habit for some employees, it can start eating away at your profit margins.
Embezzlement is more likely to occur in practices that don’t keep a close eye on their data and cash flow. Most embezzlers are simply fired and not reported to law enforcement authorities. As such, they simply move on to another job and commit the same crimes.
While you simply can’t identify embezzlers from the way they talk, dress, or act, you can be more cautious about who you hire. Check employment references, credit reports, and any court and police records especially for positions in your financial department.
Ensure you have a formal office policy that prohibits taking home supplies or drug samples without permission. Establish appropriate penalties and punishments for petty theft, and inform your staff accordingly.
Review your cash flow monthly and investigate inconsistencies in your finances as soon as possible. Verify all your vendors before writing any checks. Triple check invoices and signatures on checks, too.
Suspected embezzlement must be investigated discreetly. Involve the authorities only after your CPA or financial consultant verifies the incident. This is important since professional embezzlers are great at covering their tracks as soon as they suspect they are being investigated.
Facing financial leaks can be rough. The sooner you realise why your practice is losing money, the sooner you can fix it. Appropriate technology, adequate workflow, and efficient billing practices have huge influences in your financial outcomes. At the end of the day, prevention is the key to protecting the financial health of your business.
Image credit: Freepik