3 tips for improving your practice’s profitability

Doctor finance

With all the changing variables affecting the profitability of physician practices these days, cutting unnecessary costs remains a surefire way to improve the bottom line, according to an article in HealthCareBusiness.

Healthcare practices increasingly find themselves squeezed by shrinking reimbursements and changing payment models, writes Kevin N. Fine, director of healthcare advisory services at Kaufman Rossin, a professional services firm. Physicians may not have many options when it comes to changing the arc of large-scale industry changes, but Fine recommends “a proactive approach to managing costs (productivity and performance)” for practices looking to boost their cost efficiency.

Each practice has direct, fixed and variable costs, all of which offer opportunities for savings, says Fine. Among his suggestions:

  • Take a hard look at staffing practices. The largest individual expense most likely involves employee salaries, according to Fine. When looking for staffing efficiencies, he suggests looking at the number of employees overall, the type of staff members employed, and whether each position requires a full-time or part-time employee. For example, a practice might look at ensuring physicians aren’t spending a lot of time on basic tasks that could be done more cost-efficiently by medical assistants.
  • Keep good financial and performance records. “You can’t manage what you can’t measure,” writes Fine, who encourages practices to collect and monitor financial and performance information regularly. For practices unsure of the metrics most likely to affect their bottom line, Fine suggests starting with common indicators that affect profitability, revenue cycle, liquidity and expenses, as well as productivity measures.
  • Focus on workflows. Fine recommends a workflow analysis as among the best ways to locate inefficiencies that undermine your practice’s overall productivity. He suggests starting with areas such as the billing cycle and an average patient visit, which commonly harbor opportunities for workflow improvement.

- see the article