Running a successful medical practice depends on successful cash flow management. It’s not as simple as seeing a patient, collecting money and making profit.
To keep the cash running fluidly through your practice, and keep your business running smoothly, you need to have a plan and a strategy.
Based on the years we’ve spent working with many medical practices and professionals in Adelaide, Sydney, Melbourne and around Australia, here is some specialised cash flow tips.
Manage Patient Debts
Changes in insurance premiums and bulk billing are leaving more and more patients with more to fork out of their pockets. Not all patients can afford to pay up, and sometimes rely on a payment plan. But as a result of small and infrequent payments, medical practices can easily become bogged down with the debts of their patients. If you aren’t careful, these patient debts can also choke up your cash flow.
One simple way to reduce patient debts is to encourage your patients to pay at every appointment. Set up a reminder system that will inform them of the portion they owe at the time of their visit. You may be able to set up direct debits. This way, you’re more likely to erase the debts faster.
You should also make it easy for your patients to pay. If their preferred payment method isn’t available, you might have a harder time getting them to pay up on time. Try to incorporate a variety of efficient payment options into your practice such as:
– Credit or bank card
– Other online payment, such as PayPal
Review your patient payment processes from time to time to see if they can be made more efficient. When the payment process goes smoothly, patients are more likely to pay their bills on time.
Make Smart Equipment Purchases
When you buy equipment and supplies for your practice, invest in the best quality you can afford. High-quality equipment will last longer and won’t quickly fall apart. Even when it comes to disposable goods such as barriers, gloves, cotton gauze and masks, choosing the best quality will mean that fewer items are accidentally torn or tossed out unused.
You can also save money by ordering supplies in bulk, if you know you are going to use them, or in smaller amounts, if there’s a risk of excess. Ordering bulk materials can help you avoid running out, and may attract discounts, but you may also end up with a lot of wasted supplies especially if they expire before you can use them.
Ask an experience medical finance broker (such as Nitschke Nancarrow) about financing options if you need to pay for an expensive but necessary piece of equipment.
Pay Your Bills on Time
If you want your patients to pay you on time, you should do the same! Not only will you be creating a great business culture, you will avoid falling into debt, late fees and interest. Work with your medical accountant on designing a sustainable plan to help your manage this part of your practice.
Review Your Property Situation
Thinking through a strategy for your medical practice property could open up some new opportunities to save money and free up your cash flow.
Just because you’ve been in the same building for a long time doesn’t necessarily mean it’s the best option for your practice financially. If you own your own medical practice property, consider refinancing to reduce your repayments and get a better finance deal.
If you rent, negotiate for a better deal with your landlord. Alternatively, consider moving to a new location or even purchasing a property of your own.
Reduce Labour Costs with Technology
Give your cash flow a little more breathing room by incorporating some of the latest technology. Integrating new tech, software and processes can take time and money up front, but it’s usually worth the investment.
Automation can save time and labour, improving productivity, reducing wage costs as well as medical and data entry errors.
Look for Ways to Save More
Work with your medical accountant to go through ‘the numbers’ of your practice line by line. By carefully analysing your practice’s workflow and patient processing procedures, you may discover one or two other areas in which you can save.
An experienced medical accountant will most likely be able to identify immediate savings and cash flow opportunities.
For example, can you charge patients who don’t show up for their scheduled appointments or who cancel at the last minute? While you don’t want to have the reputation of being an inflexible or greedy practice, you also don’t want to let patients take advantage of your kindness. Every cancelled appointment means lost dollars for your practice. You have the right to protect your business’s financial interests by charging a penalty when patients don’t maintain their end of a business deal.
Want to get serious about optimising your medical practice cash flow?
Contact Nitschke Nancarrow, experts in all aspects of medical accounting, financial planning and business. 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
The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
Taxation, legal and other matters referred to on this website are of a general nature only and are based on Nitschke Nancarrow’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
Nitschke Nancarrow specialises in accounting, tax and financial advice for superannuation. Contact us now for a no obligations discussion about your needs.Tags: cash flow, medical accounting, medical practice management