Tips on running a financially efficient clinic

Running a medical practice is not that different from any other service-related business, says Kevin Sewell, a partner with accounting firm BDO Canada in Kamloops, B.C. “When we talk about running a profitable practice, much of it would be the same as it is for any other business, such as for a lawyer or an accountant,” Sewell said. This includes such strategies as making the most out of your space, negotiating your lease wisely and keeping tabs on office expenses. The most important strategy, and one that is unique to physicians, is optimizing provincial health insurance billing, Sewell says. “When you’re limited on the number of patients you can see in a day, due to rules under your provincial medical services plan or in terms of practicality, you want to make sure every one of those is being billed appropriately. You want to make sure you are catching every billing code,” he said. In fact, according to the Canadian Medical Association’s 2017 New in Practice publication, if a general practitioner in a fee-for-service environment forgets to bill for one patient visit each day, it could lead to a loss of about $6,600 per year, which represents more than 8% of gross income and 12% of net before-tax income. Read: A (short) guide to starting your practice BILLING CODES YOU MAY BE MISSING “If you are a doctor doing your own billing or have a member of your staff doing it and you have been doing it the same way for years, there are likely codes that are being missed,” said Sewell. For example, a relatively new annual payment for family physicians in British Columbia allows them to bill for longitudinal care. To ensure this important task is done correctly, Sewell suggests using a billing agency, adding a billing coordinator to your staff or having a member of your staff specially trained. Uninsured services also account for a significant amount of a physician’s day. Whether you choose to have patients pay for services each time they use one or bundle uninsured services together and charge a block fee, the New in Practice publication stresses how important it is to be compensated for these services. Another area to pay attention to is overhead expenses. According to the Ontario Medical Association, office overhead expenses typically account for 35% to 40% of gross income for most physicians, so reducing that figure can go a long way toward running your practice cost-effectively. In its publication, Revenue Management: Prescriptions for a profitable medical practice, the OMA suggests reviewing expenses regularly. Involving staff in this process is helpful, as they have insight into how the practice is managed. Take stock of what you are spending on regular expenses, such as telephone and software systems and medical and office supplies, and then explore less costly alternatives. Read: The money docs: Financial literacy night school MONEY SAVED Dr. Benjamin Barankin, a dermatologist and medical director of Toronto Dermatology Centre, says it pays to do some research. “Whether it’s periodic sharps container emptying or shredding services or telecom or banking services, every two to three years, devote some time, or that of your manager, to requesting a discount or getting two to three other quotes to see if you can beat them on price or service,” he said. “Money saved is worth more than money earned.” Dr. Barankin has a few other tips. For example, he suggests considering a computerized kiosk for sign-in at your office to free up the front desk staff for other tasks. “If you have an instrument sterilizer, see if getting a newer, faster or larger model would be a good idea. Just because your machine is still working, doesn’t mean it’s the best one for the job,” he said. It is also helpful to regularly measure and analyze your financial results. The OMA recommends establishing benchmarks to measure your practice’s financial and productivity performance. This can be as simple as creating a monthly scorecard that captures data such as billings, collections, total visits and net revenue, and assessing regularly where there is room for improvement. MAXIMIZE YOUR CLINIC SPACE When it comes to one of your biggest expenses—your space—a key step to reducing costs is to negotiate a better lease. The OMA’s revenue management publication recommends starting negotiations with your landlord at least eight to 12 months before your lease expires. Before that, research nearby office leasing costs to get an idea of fair market value. The OMA also says to consider using a real estate agent or a professional lease negotiator who can examine the contract for troublesome clauses or work to get a better rate. Sewell says it’s also important to make the most of that space. “You may have multiple doctors, but are your exam rooms turning over efficiently? Does your physical space lend itself to maximizing the number of people that can be seen in a day?” he said. Physicians can also consider seeking out allied health professionals to share the space, along with costs for rent, personnel and supplies. Read: What you need to know about mortgage prepayment penalties Another major expense of running a practice is staffing. Sewell recommends ensuring you have the right balance between administration and physicians and cross-training staff so that you have coverage when someone goes on vacation. And while administrative tasks are part of a physician’s job, Sewell says to look for opportunities to reduce the workload, such as through hiring an office manager or billing coordinator. Look at what it’s worth for your mental health and stress reduction. It might not be about the number. It might be worthwhile because it is going to give you more time at home with your family and for other things,” Sewell says. “Accountants can do all kinds of analysis, but there is a qualitative component, which is often more important than the numbers.”

Tips on running a financially efficient clinic

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