As a medical practice owner, it is important to understand and optimise the areas of your business that generate profit growth.
Simply put, profit drivers are facets of the business that generate income. Profitability is often shown through four key elements:
- Total hours worked
- Total hours face-to-face consulting
- Total fees generated
- Number of services provided
How much is earned from these elements is up to your medical practice and how it utilises each one to its advantage.
It is reasonable to assume that through these elements profit is generated and thus, able to be maximised for profitability. This can be achieved through small changes to your current schedule and ways of operation within your practice.
Analyse total hours
Sometimes, it’s worth taking a step back to analyse what is working, and what is not. Could the hours of the working day be put to better use? As enticing as it is to increase daily hours worked, this is not sustainable in the long run. Instead, it’s more advantageous to look at how you can get the most out of your work day, rather than just simply making it longer to see more patients.
Optimise ace to face consultations
The most obvious and perhaps the main driver of profitability for a practice comes from the amount of patients seen per hour. Comparing the fees generated from in-person consultations to the cost of having doctors in office can allow for an accurate statistic on how much the practice is generating on an hour basis.
From here, practices can evaluate what processes need to be put in motion to increase profits. Key considerations include increasing doctor numbers to combat the growing list patients and fitting in more patients per hour where necessary. Considering and then making these adjustments to boost the practice will bring both short and long term benefits.
Make the most of total fees generated
As we’ve mentioned, it’s important to look at the revenue and understand the cost per hour of the practice. Looking at operation costs can lead to corrections and adjustments for the benefit of the practice and its profitability.
Are there unnecessary costs chewing through the budget that can be adjusted? Variable costs such as phone calls, casual staff and postage can all be taken into account and adjusted to a reasonable level.
Refine the services provided
Looking at the current services provided by doctors in the practice can lead to the option of adding new procedures and services which will open up new patient markets, as well as increase profits. For most practices it is relatively easy to shift and add to the range of services, but there will likely be some extra training for doctors and an investment in marketing required.
Look at the big picture
For a medical practice, looking at profitability drivers as a whole can prove to be more beneficial than looking at each individually, because maximising profits often comes down to multiple contributing factors. So make sure you’re considering the bigger picture.
If you’re interested in developing a holistic wealth strategy, tailored specifically to your needs as a medical professional, contact us today for a no obligations discussion about where you’re at.
DocWealth are specialists in accounting, financial planning, investment and finance, investment and business for medical professionals.
We operate in Adelaide, Sydney, Melbourne and throughout Australia. Managing partner Kym Nitschke is available for a free initial discussion about your situation. Call us on (08) 8379 9950 or send me an email.
– Kym Nitschke
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DocWealth specialises in accounting, tax and financial advice for superannuation. Contact us now for a no obligations discussion about your needs.