How to Increase Revenue, Add Stability to Your Practice
To make a business successful, entrepreneurs should spend about 60% of their time servicing customers.
The other 40% should be focused on administrative tasks such as human resources and accounting, according to Mario Iezzoni, certified business analyst at the Small Business Development Center at University of South Florida.
For a practicing physician, this kind of split is virtually impossible.
“I couldn't ask a physician to cut back to 60%,” he said. “It puts them in the role of being more administrative when their whole role is to be a caregiver.”
But for physicians, who likely spend very little time on the business side of the practice, this could at least make doctors consider focusing a bit more attention on their business.
Be an Administrator
It is increasingly difficult for physicians to retain a solo practice and make money doing so. You may not have to spend 40% of your time focusing on administration, but thinking a bit more like an entrepreneur can help increase revenue and make a practice more viable both short and long term.
According to Iezzoni, knowledge of the following can increase your revenue:
- The cost of malpractice insurance and what your colleagues pay
- The cost per square foot for office space and occupancy charges and comparable going rates
- The cost per minute of the patient care you provide
- Net collections (and your competitors')
- How the wages you pay compare with those of colleagues
“This is little stuff, unfortunately,” he said. “But it's the nuts and bolts … and how you compare.”
Kathleen DeBruhl, a healthcare attorney in New Orleans, said physicians should also make sure contracts are current. She has seen practices that were being paid 75% of current Medicare fees because they never got new contracts. She recommends taking the top five payers and “make sure you are getting in there and getting the best pricing.”
Know Your Numbers
It is important for physicians to know what their practice should be making, and David Zetter, president of Zetter Healthcare Management Consultants, said this is relatively easy to find out.
There are a lot of benchmarking data available that doctors can use to see if their fees, profit, reimbursements, and number of procedures are in line with those of their competitors. Zetter uses data from the Medical Group Management Association. Iezzoni likes the products the Frank Cohen Group, LLC provides.
“We can really determine whether the practice is healthy or not based on specialty,” Zetter said. “We can show where it is and compare to competitors and colleagues at a higher level to see what they are doing.”
One number Iezzoni said can be used to quickly improve revenue is the state average of CPT codes used in a specialty. Doctors can average their own procedures to see if they are under coding (and losing money) or over coding (and at risk for an audit).
“It's an old-fashioned recommendation, but if they aren't doing it now, shame on them,” Tuttle said. “I still see doctors under coding every day.”
A slight enhancement can justify a higher level of service, he said. Bumping from a level three to level four is worth about $25. A physician who could do that five times a week could net $6,000 annually with no overhead increase.
Collecting payment is the bane of many practices. This is one area that can almost always be improved to increase revenue. Zetter said a sound financial policy should be communicated to patients and strictly adhered to. Office staff should know to take co-pays when patients arrive and try to collect balances immediately. “If patients ignore the first statement, they will ignore second and third, too,” Zetter said.