If you are not benchmarking your medical practice financial results on a monthly basis, then you are leaving the success of your practice to chance. Unfortunately, the reality is that many specialists and surgeons do not have systems and processes in place to capture and review their monthly data.
In this article I will highlight why it is important to benchmark your practice, how you can achieve this and what data you require.
What data do you require to analyse your medical practice financial results?
At a high level, you should be reviewing your income and expenses on a monthly basis, and benchmarking this against your budget. A budget is like an annual financial plan for your business, where you have set your desired income for the year and your anticipated expenses, such as wages, marketing, etc.
When you compare budgeted versus actual figures, you can make adjustments where required. For example, if the income is much lower than anticipated, you can investigate what the cause is: staff inefficiency in booking appointments, or perhaps you are not getting enough referrals? The same goes for your expenses. Any material variations from the budget should be further analysed.
You also need to keep a close eye on your debtors. This means that you cannot let your outstanding patient fees get out of control. What procedures do you have in place to ensure your patients pay their fees?
Other useful information is the number of new patients per month and why they made an appointment with your practice. For example, was it through your website, through an advertisement, or where they referred to the practice? Identifying the source of new patients will help you to determine which marketing channels are working, and where you are getting the best return on your marketing spend.
In addition, what services were provided to the patients? Did they have a consultation with a doctor, did they see a nurse, how many surgeries did you perform? Are their certain services in your practice that are producing better financial results than others?
Why is benchmarking your medical practice financial results important?
We have already highlighted that your marketing strategy should be tested and measured, so you can spend your budget wisely.
Understanding your practice numbers will also help you to identify appropriate staffing levels (do you need more nurses?), and ensure your wage bill remains an appropriate percentage of your revenue.
Finally, by staying on top of your financial results on a monthly basis you can make adjustments throughout the year, and have a better chance of achieving your budgeted results.
How can you benchmark your medical practice financial results?
To be able to accurately benchmark your practice, you will require the following:
– a realistic budget of income and expenses (can be based on the previous year if still relevant); – systems to track and analyse the relevant data (ideally a patient management and accounting package that talk to each other); – accurate data capture or input; – the skills to interpret the data.
You may need to seek the assistance of your accountant to review your financial results on a monthly basis, or your practice manager may be qualified and skilled to assume this role and report to you.
Business planning and performance benchmarking has become critically important if you are in private practice. For many medical specialists this is foreign territory. You should seek professional advice where you believe you do not have the time and/or skills to manage this within the practice.
About Yves Schoof
I specialise in managing and coordinating the financial affairs of medical professionals and have been recognised as one of the best financial planners in Australia. I am a Certified Financial Planner and member of the Financial Planning Association of Australia.
As I understand your time is extremely valuable and scarce, I am able to offer flexible meetings times, including outside business hours and during the weekend. I can even come and meet you somewhere convenient, or talk via videoconference on Skype.
My first consultation is free. I allocate up to 90 minutes to discuss your personal circumstances and to establish how I may best assist you. Where you already have an existing adviser, I would be happy to offer a second opinion. I always quote a fixed dollar fee before we start working together.
Please contact me on email@example.com or call me direct on 0432 885 295. You can follow me on Twitter @YvesSchoof or connect with me on Linkedin to receive new articles.
Yves Schoof and Affluence Private Wealth are Authorised Representatives of Synchron, AFS Licence No. 243313. The information posted is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS) or other offer document prior to making a decision.
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