Is your practice profitable? (I know…kind of a low blow)
But what about BEFORE the pandemic…was your business profitable?
You see, that’s the dilemma of many practice owners. You’re the first one to the office and the last one to get paid. I have heard countless stories of owners making less than their clinicians (don’t feel bad, I was the third-highest paid in my office). I remember vividly how demoralizing and frustrating it was to be working 60+ hours a week and getting paid less than a therapist who was two years out of school.
And with COVID-19, things are worse. Profitability is even more threatened, as you work furiously to pivot your businesses to meet new CDC guidelines, experiment with new delivery models of care, deciding which staff to bring back, and marketing for new patients—all while making sure your overhead costs are less than revenues.
And what’s the point if your business isn’t profitable?
Without a profitable practice that meets your personal financial needs, you remain stuck in survival mode: overwhelmed, constantly working just to stay afloat, missing the financial stability you want for your family. And, perhaps, miss the chance to step away from patient care altogether, to play a bigger game, to be the CEO, pursue other passions, and control your schedule. That’s no way to live—or to run a business.
The foundational principles behind practice profitability are critically important right now, as owners rebuild and seek to re-shape their businesses to meet the needs of this historic, unprecedented moment we’re living through. True profitability is within reach for every practice owner who makes these principles part of their action plan:
Trying to do everything yourself doesn’t help profitability. It hurts.
Yes, we all need to be fiscally responsible, and savvy about budgeting and spending. But overly cautious practice owners too often nickel and dime themselves into a corner. By stepping over dollars to save pennies, they miss out on huge revenue opportunities that transform the bottom line, and put real money in their paychecks.
These counterproductive attempts to save money can look different from one practice to the next. Maybe you’re trying to save money doing your own books, or marketing without a plan of attack and training, or making critical business decisions without someone to guide you. Continuing to overwork yourself while your under-utilizing team fails to meet the targets and goals at the highest levels of performance and independence.
High profits are produced by good systems
A practice without robust, well-organized systems is like sailing on the water in a fifty-foot Catalina that has multiple small leaks in the hull. Although you probably won’t sink, you’ll continue to work harder and harder for the same (or less) money. Sound familiar?
In my research, private practices are losing more than $100,000 in profits because they lack efficiency in how they run things. Just imagine for a moment what an additional 100K would do for you? I bet it would ease the pain a bit.
Where are YOU leaking money?:
- Cancellations. Just a 5% reduction in your cancellation rate can add an additional $25,000 in your pocket annually.
- Properly billed charges. Just a half-code reduction in normal billing can decrease your bottom line by more than $60,000 a year.
- Get paid upfront. Thousands of dollars literally walk out the door when money isn’t collected at the front desk.
And, of course, you need to keep track of all of this data to maintain standards and performance, budgeting and planning, charting progress, and identifying areas for improvement.
Riches lie in the niches
Marketing can be expensive…especially if you don’t dial in your audience. Check out the blog I wrote about the importance of targeting your practice to your ideal audience as a way to generate an abundant, lasting, and reliable stream of patient visits.
Now is not the time to panic and become a generalist practitioner. People want to see a specialist for their problem. And although it may seem counterintuitive to accept anyone and everyone who walks in the door, I caution you to get clear first on your target audience.
You want to clearly identify your ideal patient (the one that you get all giddy when they enter the clinic). Understand who your patients go see when they need a doctor…and reach out and see how you can help more of their people. Developing a marketing plan that speaks to the patients you most want to attract is key. Having a consistent system to attract your committed and motivated patients is paramount if you want to build a rock-solid, profitable practice.
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By Jamey Schrier
PT, Founder & CEO, Practice Freedom U
June 18, 2020
6 minute read