In private practices, doctors have the distracting and unfortunate need to understand the underlying operating practices of their business model. Unfortunately, most do not—at least to an adequate degree. Accounting practices make this even more difficult by obscuring the ‘lifeblood’—if you will—of the business, that which necessitates the rest of the business to grow and thrive: CASH FLOW.
Any successful private practice needs to know how its revenue and expenses (and other fun accounting terms) translate into money in the bank. Tragically, most of the private practices we look at have a profit margin of only 5-7%. This dismal number means you’re still living paycheck to paycheck. A successful service-based business—that’s you private practice—has a 20% margin. Yes, this number is possible, so how do you achieve that? The answer is to adequately diagnose and predict your revenue, cash flow and other critical business measures.
In the following video segment from a presentation at a recent MGMA conference, I discuss just how to do this. Enjoy, share with your staff, and don’t hesitate to contact me at Clinic Services if you have any questions or need advice on how to make your private practice as healthy as you nobly strive for your patients to be.
If you and/or your staff would like to attend an upcoming web conference presentation on the topic of managing cash flow, simply provide your email and name in the registration link and we will alert you when we host our next live web conference, and send you a link to the replay.